YUKON
Justice

                            BUSINESS CORPORATIONS ACT
                                  (Section 190)
                                                                       Form 3-01

                                                         ARTICLES OF CONTINUANCE

1.       Name of Corporation:

         SONUS CORP.


2.       The classes and any maximum  number of shares that the  corporation  is
         authorized to issue:

         SEE ATTACHED SCHEDULE "A"


3.       Restrictions if any on share transfers:

         NONE


4.       Number (or minimum or maximum number) of Directors:

         Minimum 3 - Maximum 11


5.       Restrictions if any on businesses the corporation may carry on:

         NONE


6.       If change of name effected, previous name:

         NOT APPLICABLE


7.       Details of incorporation:

         SEE ATTACHED SCHEDULE "B"


8.       Other provisions if any:

         SEE ATTACHED SCHEDULE "C"

<TABLE>
---------------------------------------- ------------------------------------- -------------------------------------

<S>      <C>                             <C>                                   <C>
9.       Date                            Signature                             Title
         December 15, 1998               "Signed by: William DeJong"           Director/Asst. Secretary

---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>

YG(3040Q)F1 REV. 11/87


<PAGE>


                                  SCHEDULE "A"

The  Corporation  is  authorized  to issue an unlimited  number of Common Shares
without nominal or par value and an unlimited number of Preferred Shares without
nominal or par  value,  which  Common  Shares and  Preferred  Shares  shall have
attached thereto the rights, privileges, restrictions and conditions hereinafter
set forth:

PROVISIONS ATTACHING TO THE COMMON SHARES

Voting Rights

i)       at all meetings of the shareholders of the Corporation,  the holders of
         the Common Shares shall be entitled to one (1) vote for each such share
         so held;

Dividends and Other Distributions

ii)      the holders of the Common  Shares  shall be  entitled  to receive  such
         dividends as the directors of the Corporation may, in their discretion,
         declare thereon; and

iii)     in the  event of the  liquidation,  dissolution  or  winding-up  of the
         Corporation or other distribution of its assets among the shareholders,
         the  holders of the Common  Shares  shall be  entitled  to receive  the
         remaining property of the Corporation.

PURSUANT TO THE  SPECIAL  MEETING OF  SHAREHOLDERS  OF THE  CORPORATION  HELD ON
FEBRUARY 9, 1998, ITEM NO. 2 OF THE ARTICLES OF THE CORPORATION  WERE AMENDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 167(1)(F) OF THE BUSINESS CORPORATIONS
ACT (ALBERTA) ON FEBRUARY 9, 1998 BY THE ADDITION OF THE FOLLOWING PROVISIONS:



<PAGE>


         Simultaneously   with  the  effective   date  of  this  amendment  (the
         "Effective  Date"),  each of the Corporation's  Common Shares,  without
         nominal or par value,  issued and outstanding  immediately prior to the
         Effective  Date (the  "Old  Common  Shares")  shall  automatically  and
         without any action on the part of the holder thereof be reclassified as
         and changed into one-fifth (1/5) of a Common Share,  without nominal or
         par value  (the "New  Common  Shares"),  subject  to the  treatment  of
         fractional  share  interests  as  described  below.  Each  holder  of a
         certificate or certificates  which  immediately  prior to the Effective
         Date represented outstanding Old Common Shares (the "Old Certificates,"
         whether one or more) shall be entitled  to receive  upon  surrender  of
         such  Old  Certificates  to  the   Corporation's   Transfer  Agent  for
         cancellation,  a certificate or certificates  (the "New  Certificates,"
         whether one or more) representing the number of whole New Common Shares
         into which and for which the Old Common Shares formerly  represented by
         such Old Certificates so surrendered,  are reclassified under the terms
         hereof.  From and after the  Effective  Date,  Old  Certificates  shall
         represent  only the  right to  receive  New  Certificates  (and,  where
         applicable,  cash in lieu of  fractional  shares,  as  provided  below)
         pursuant  to  the  provisions   hereof.   No   certificates   or  scrip
         representing  fractional  share  interests in New Common Shares will be
         issued,  and no such fractional  share interest will entitle the holder
         thereof

<PAGE>
                                      -3-

         to vote, or to any rights of a shareholder of the Corporation. A holder
         of Old  Certificates  shall  receive,  in lieu of any fraction of a New
         Common  Share to which the holder would  otherwise be entitled,  a cash
         payment  therefor on the basis of the  closing  price of the Old Common
         Shares on The Alberta Stock  Exchange on the Effective  Date (or in the
         event the Common Shares are not so traded on the Effective  Date,  such
         closing  price on the next  preceding  day on which  such  shares  were
         traded on The Alberta Stock Exchange). If more than one Old Certificate
         shall  be  surrendered  at  one  time  for  the  account  of  the  same
         shareholder,  the  number  of whole  New  Common  Shares  for which New
         Certificates  shall be  issued  shall be  computed  on the basis of the
         aggregate   number  of  Old  Common  Shares   represented  by  the  Old
         Certificates  so  surrendered.  In the  event  that  the  Corporation's
         Transfer Agent  determines  that a holder of Old  Certificates  has not
         tendered all his  certificates  for exchange,  the Transfer Agent shall
         carry  forward  any  fractional  share until all  certificates  of that
         holder  have  been   presented  for  exchange  such  that  payment  for
         fractional  shares to any one person shall not exceed the value of four
         Old Common  Shares.  If any New  Certificate  is to be issued in a name
         other than that in which the Old Certificates  surrendered for exchange
         are  issued,  the Old  Certificates  so  surrendered  shall be properly
         endorsed and otherwise in proper form for  transfer,  and the person or
         persons  requesting  such  exchange  shall  affix any  requisite  stock
         transfer  tax stamps to the Old  Certificates  surrendered,  or provide
         funds for their  purchase,  or  establish  to the  satisfaction  of the
         Corporation's  Transfer Agent that such taxes are not payable. From and
         after the Effective  Date the amount of capital  represented by the New
         Common  Shares  into  which  and for which the Old  Common  Shares  are
         reclassified  under the terms hereof shall be the same as the amount of
         capital  represented  by the Old Common Shares so  reclassified,  until
         thereafter reduced or increased in accordance with applicable law.



PROVISIONS ATTACHING TO THE PREFERRED SHARES

Directors' Authority to Issue in One or More Series
---------------------------------------------------

i)       the  Preferred  Shares  may from  time to time be issued in one or more
         series and  subject to the  following  provisions,  and  subject to the
         sending of articles of amendment in prescribed  form,  and the issuance
         of a certificate of amendment in respect thereof, the directors may fix
         from time to time  before  such issue the number of shares  which is to
         comprise  each  series  and  the   designation,   rights,   privileges,
         restrictions  and  conditions  attaching  to each  series of  Preferred
         Shares including, without limiting the generality of the foregoing, the
         rate or amount of dividends or the method of calculating dividends, the
         dates of payment thereof,  the redemption,  purchase and/or  conversion
         prices  and  terms  and  conditions  of  redemption,   purchase  and/or
         conversion, and any sinking fund or other provisions;

<PAGE>
                                      -4-

ii)      the Preferred Shares of each series shall,  with respect to the payment
         of dividends and the distribution of assets or return of capital in the
         event of  liquidation,  dissolution  or winding-up of the  Corporation,
         whether  voluntary  or  involuntary,  or any other return of capital or
         distribution of assets of the Corporation  among its  shareholders  for
         the  purpose  of  winding  up its  affairs,  rank on a parity  with the
         Preferred  Shares of every other  series and be entitled to  preference
         over the  Common  Shares and over any other  shares of the  Corporation
         ranking  junior to the Preferred  Shares.  The Preferred  Shares of any
         series may also be given such other preferences,  not inconsistent with
         these  articles,  over the Common  Shares  and any other  shares of the
         Corporation  ranking junior to such Preferred Shares as may be fixed in
         accordance with clause (i) above;

iii)     if any cumulative dividends or amounts payable on the return of capital
         in respect of a series of  Preferred  Shares are not paid in full,  all
         series  of  Preferred  Shares   participate   rateably  in  respect  of
         accumulated dividends and return of accumulated dividends and return of
         capital; and

iv)      unless the directors  otherwise  determine in the articles of amendment
         designating a series, the holder of each share of a series of Preferred
         Shares  shall not,  except as  otherwise  specifically  provided in the
         Business  Corporations Act (Yukon), be entitled to receive notice of or
         vote at any meeting of the shareholders.


                        FIRST SERIES OF PREFERRED SHARES
                        --------------------------------

Pursuant to the  Resolutions of the Directors of the  Corporation,  duly passed,
and in  accordance  with  subsection  27(5)  of  the  Business  Corporation  Act
(Alberta),  the Articles of the Corporation  were amended December 16, 1997 such
that the first series of Preferred  Shares of the  Corporation are designated as
"Series  A  Convertible   Preferred   Shares"  with  such  rights,   privileges,
restrictions  and  conditions  attaching to the shares of such series as are set
forth as follows:

                      SERIES A CONVERTIBLE PREFERRED SHARES

                   "1.  Number  and   Designation.   The  number  of  shares  to
         constitute  this series shall be 13,333,333 and the designation of such
         shares   shall  be  the  "Series  A   Convertible   Preferred   Shares"
         (hereinafter  called "this Series").  The number of shares constituting
         this Series may be decreased  from time to time by action of the Board,
         but not below the number of shares of this Series then outstanding. All
         shares  of this  Series  shall  be  identical  with  each  other in all
         respects.  The shares of this  Series  shall rank  senior to the common
         shares (the "Common  Shares") of the  Corporation  as to cash dividends
         and  upon   liquidation,   as  described   below.  Any  amounts  herein
         referencing  share  prices or  numbers  of shares  shall be  subject to
         appropriate   adjustments   in  the   event   of  any   stock   splits,
         consolidations or the like.

<PAGE>
                                      -5-

                   "2. Dividend Rights.

                   (a) Subject to the  provisions of this Section 2, the holders
         of shares of this Series shall be entitled to receive  when,  as and if
         declared  by the  Board,  out of  assets  legally  available  therefor,
         cumulative  dividends  ("Dividends")  at the applicable  rate per annum
         specified  in Section 2(b) hereof from the date of issuance and payable
         in accordance  with Section 2(c) hereof.  Dividends shall be cumulative
         from the date of initial  issuance  of the shares of this  Series  (the
         "Initial Issuance Date"),  whether or not there shall be assets legally
         available  for the  payment  of such  Dividends.  In the event that the
         Board  shall  declare a  Dividend,  subject  to  applicable  regulatory
         approvals,  such  Dividend  may,  at the  discretion  of the Board,  be
         payable in Common  Shares.  The number of Common Shares to be issued to
         the  holders of shares of this Series upon the payment of a Dividend in
         Common  Shares  shall be the  amount of the  Dividends  payable to such
         holder  pursuant to this Section 2 divided by either (i) (if the Common
         Shares  are not  traded on the New York Stock  Exchange,  the  American
         Stock  Exchange or the Nasdaq  National  Market) U.S. $1.35 or (ii) (if
         the  Common  Shares  are  traded on the New York  Stock  Exchange,  the
         American  Stock  Exchange  or the Nasdaq  National  Market) the average
         Market Price of the Common Shares as such term is defined below for the
         ten (10) trading  days  immediately  preceding  the Record Date as such
         term is defined in Section 2(c) hereof.

                            For all purposes  hereof,  the term "Market Price of
         the Common  Shares" as of any  specified  date shall  mean:  (i) if the
         Common  Shares are listed or admitted for trading on one or more United
         States national securities  exchanges,  the daily closing price for the
         Common Shares on the  principal  exchange in the United States on which
         the Common Shares are listed;  (ii) if the Common Shares are not listed
         or  admitted  for  trading on any  United  States  national  securities
         exchange,  the daily  closing price for the Common Shares on the Nasdaq
         National or Nasdaq  Small-Cap  Market  ("Nasdaq");  (iii) if the Common
         Shares  are not  listed or  admitted  for  trading  on a United  States
         national  securities  exchange or on Nasdaq, the daily closing price of
         the Common  Shares on the principal  stock  exchange in Canada on which
         the Common Shares are listed  (expressed in United States dollars based
         upon the noon  buying  rate in New York  City for  cable  transfers  in
         Canadian  dollars as  certified  for  customs  purposes  by the Federal
         Reserve Bank of New York);  (iv) if the Common Shares are not listed or
         admitted to trading on any United States national or Canadian  national
         securities  exchange or on Nasdaq,  the average of the reported bid and
         asked   prices  on  the  trading  day   preceding   such  date  in  the
         over-the-counter  market as furnished by the National Quotation Bureau,
         Inc., or, if such firm is not then engaged in the business of reporting
         such prices, as furnished by any member of the National  Association of
         Securities Dealers,  Inc. selected by the Company; or (v) if the Common
         Shares are not publicly traded,  the Market Price for such day shall be
         the fair market value thereof determined jointly by the Company and the
         holder of a majority  of the shares of this  Series  then  outstanding;
         provided,  however,  that if such parties are unable to reach agreement
         within  a  reasonable  period  of  time,  the  Market  Price  shall  be
         determined  in good faith by the  independent  investment  banking firm
         selected  jointly by the  Company  and the holder of a majority  of the
         shares of this Series then  outstanding or, if that selection cannot be
         made within an additional 15 days, by an independent investment banking
         firm  selected by the American  Arbitration  Association  in accordance
         with its rules.
<PAGE>
                                      -6-

                   "(b) The  Dividend per share of this Series shall be computed
         based  upon a rate per annum of 5% on a base  amount of U.S.  $1.35 per
         share of this Series (the "Base  Amount").  The Dividend rate per annum
         shall be subject  to  increase  in the event that all of the  following
         conditions (the "Triggering Conditions") have not been satisfied by the
         dates specified below: (i) the Common Shares are listed on the New York
         Stock  Exchange,  the American  Stock  Exchange or the Nasdaq  National
         Market;  (ii) the  Common  Shares  are  traded  on the New  York  Stock
         Exchange,  the American Stock Exchange or the Nasdaq National Market at
         a Market Price greater than U.S.  $2.40 per Common Share on each of the
         10  consecutive  trading  days  preceding  such  date;  and  (iii)  the
         Corporation's  net income  (excluding  profit or loss on  disposal of a
         significant  part of the Company's  assets or separate segment thereof,
         gains on restructuring payables,  gains or losses on the extinguishment
         of debt,  expropriations  of  property,  gains or  losses  that are the
         direct result of a major casualty,  or one-time  losses  resulting from
         prohibition  under a  newly-enacted  law or  regulation)  before income
         taxes,  Dividends  on the  shares of this  Series and  amortization  of
         goodwill and covenants not to compete for the three consecutive  fiscal
         quarters  preceding  such date,  as  reported  in or  derived  from the
         Corporation's quarterly or annual reports filed with the Securities and
         Exchange Commission,  shall have averaged at least U.S. $0.07 per fully
         diluted Common Share per fiscal quarter,  provided,  however, in making
         such  calculation,  the Common  Shares  issuable  upon  exercise of the
         warrants issued to Warburg Pincus Ventures, L.P. ("Warburg"),  pursuant
         to that certain Warrant  Agreement  between the Corporation and Warburg
         relating to warrants to purchase 10,000,000 Common Shares (the "Warrant
         Agreement"),  shall be excluded  but Common  Shares  issuable  upon the
         conversion  of the shares of this Series shall not. All  references  to
         per share amounts or prices with respect to the  Triggering  Conditions
         shall be appropriately adjusted for any subdivision,  consolidation, or
         reclassification of the Common Shares. Until the Triggering  Conditions
         have been satisfied, the Dividend rate per annum shall be (A)15% of the
         Base Amount per share of this Series from and after January 1, 2003 and
         payable in accordance  with Section 2(c) hereof  commencing  January 1,
         2004;  (B) 18% of the Base  Amount  per share of this  Series  from and
         after  January 1, 2004 and  payable in  accordance  with  Section  2(c)
         hereof commencing January 1, 2005; and (C) thereafter,  21% of the Base
         Amount  per share of this  Series  from and after  January  1, 2005 and
         payable in accordance  with Section 2(c) hereof  commencing  January 1,
         2006.  Upon the  satisfaction  of all the  Triggering  Conditions,  the
         Dividend per share of this Series  shall be computed  based upon a rate
         per annum of 5% of the Base  Amount.  Accruals of  Dividends  shall not
         bear  interest.  All Dividends  declared upon the shares of this Series
         shall be declared pro rata per share.

                   "(c) The record date for the  determination of the holders of
         shares of this Series who shall be entitled to receive  Dividends  (the
         "Record  Date") shall be the first  business day of each calendar year,
         and only the  holders of shares of this  Series of record on the Record
         Date shall be entitled to receive such Dividends. All Dividends payable
         to such  holders  of  record  shall be paid on the tenth  business  day
         following the Record Date on each issued and outstanding  share of this
         Series.

                   "(d)  Dividends  payable  on  shares of this  Series  for any
         period other than a full dividend period shall be computed on the basis
         of a 360-day year  consisting  of twelve  30-day  months.  Any Dividend
         payment made on shares of this Series  shall first be credited  against
         the earliest  accumulated but unpaid  Dividends due with respect to the
         shares of this Series.

<PAGE>
                                      -7-

                  "(e) No  dividends  shall be declared or paid or set aside for
         payment  on  any  share  capital  of  the  Corporation  ranking,  as to
         dividends, on a parity with or subordinate to the shares of this Series
         for  any  period  unless  full  accumulated   Dividends  have  been  or
         contemporaneously   are  declared  and  paid  or  declared  and  a  sum
         sufficient  for the payment  thereof set aside for such  payment on the
         shares of this Series for all Dividend periods  terminating on or prior
         to the date of payment of such  dividends.  When Dividends are not paid
         in full on the shares of this Series and any other preferred  shares of
         the  Corporation  ranking  with  respect to payment of  dividends  on a
         parity with the shares of this Series,  all dividends  declared or paid
         upon shares of this  Series and such other  preferred  shares  shall be
         declared and paid pro rata so that the amount of dividends declared and
         paid on the shares of this Series and such other preferred shares shall
         in all  cases  bear to each  other  the  same  ratio  that  accumulated
         dividends  per  share  (which  in the case of  noncumulative  preferred
         shares  shall  not  include  any  accumulation  in  respect  of  unpaid
         dividends for prior dividend periods) on shares of this Series and such
         other  preferred  shares bear to each other.  Except as provided in the
         preceding sentence, unless full accumulated Dividends have been paid or
         declared  and a sum  sufficient  for the payment  thereof set aside for
         payment,  no dividends (other than dividends or  distributions  paid in
         Common  Shares,  or  options,  warrants or rights to  subscribe  for or
         purchase Common Shares, or, in each case, any other series of shares of
         the Corporation  ranking subordinate to the shares of this Series as to
         dividends  and upon  liquidation)  shall be declared  and paid or a sum
         sufficient  for the payment  thereof set aside for payment or any other
         distribution declared or made upon the Common Shares or any other class
         of shares of the Corporation ranking subordinate to or on a parity with
         the  shares of this  Series as to  dividends  or upon  liquidation.  No
         Common Shares or shares of any other class of shares of the Corporation
         ranking subordinate to or on a parity with the shares of this Series as
         to  dividends  or upon  liquidation  shall be  redeemed,  purchased  or
         otherwise acquired for any consideration (and no funds shall be paid to
         or made  available  for a sinking fund for the  redemption  of any such
         share  capital)  by the  Corporation  (except  by  conversion  into  or
         exchange  for  shares of the  Corporation  ranking  subordinate  to the
         shares of this Series as to dividends  and upon  liquidation  or except
         with respect to Common Shares that the Corporation has become obligated
         to redeem  prior to the  issuance of any shares of this Series upon the
         occurrence of specified  circumstances)  unless, in each case, the full
         accumulated  Dividends  shall  have  been  paid or  declared  and a sum
         sufficient  for the payment  thereof set aside for payment.  Holders of
         shares of this Series  shall not be entitled to any  dividend,  whether
         payable in cash,  property or stock, in excess of the full Dividends on
         such shares.

                  "(f)  Upon  conversion  of any  shares  of this  Series by any
         holder thereof pursuant to Section 7 hereof,  any Dividends accrued and
         payable to such holder shall be  forfeited  and the  Corporation  shall
         have no further  obligation to such holder of shares of this Series for
         such accumulated Dividends.

                  "3.  Liquidation  Rights. (a) In the event of any voluntary or
         involuntary dissolution,  liquidation,  or winding up of the affairs of
         the  Corporation,  after  payment or provision for payment of the debts
         and other  liabilities of the Corporation and any preferential  amounts
         payable with respect to securities of the Corporation  ranking prior to
         the shares of this Series ("Senior Preferred  Shares"),  the holders of
         shares of this Series shall be entitled to receive out of the assets

<PAGE>
                                      -8-

         of the Corporation  available for distribution to shareholders,  before
         any  distribution  of assets is made to holders of the Common Shares or
         any other share capital of the Corporation  ranking  subordinate to the
         shares of this Series, a liquidating distribution in an amount equal to
         the  greater of (i) U.S.  $1.35 per share of this Series plus an amount
         equal  to any  accrued  and  unpaid  Dividends  (including  accumulated
         Dividends,  whether  or not  declared)  to and  including  the  date of
         distribution or (ii) the amount  distributable to the holders of shares
         of this Series as if such  holders had  converted  their shares of this
         Series into  Common  Shares  pursuant  to Section 7 hereof  immediately
         prior to such dissolution,  liquidation or winding up of the affairs of
         the Corporation (plus accumulated Dividends,  whether or not declared).
         Amounts  payable  pursuant to clause (i) or (ii) of this  Section  3(a)
         shall be distributed ratably among the holders of shares of this Series
         in  proportion  to the  number  of shares of this  Series  held.  After
         payment to the  holders of shares of this  Series of the full amount to
         which such  holders  are  entitled as set forth  above,  the holders of
         shares  of this  Series  shall  have no  right  or  claim to any of the
         remaining assets of the Corporation.

                  "(b) If upon any such  dissolution,  liquidation or winding up
         of the  affairs  of the  Corporation,  the  assets  of the  Corporation
         distributable  among  the  holders  of shares  of this  Series  and the
         holders  of all other  classes  or series of shares of the  Corporation
         ranking  on  a  parity  with  the  shares  of  this  Series   shall  be
         insufficient  to permit the  payment  to them of the full  preferential
         amounts  to which  they are  entitled,  then the  entire  assets of the
         Corporation so to be distributed shall be distributed ratably among the
         holders of shares of this  Series  and such other  classes or series of
         shares of the  Corporation in proportion to the sum of the  accumulated
         dividends and the liquidation preferences per share.

                  "(c) The sale, conveyance, mortgage, pledge or lease of all or
         substantially all the assets of the Corporation shall be deemed to be a
         liquidation,  dissolution or winding up of the Corporation for purposes
         of this Section 3.

                  "4. Optional Redemption. (a) The shares of this Series may not
         be redeemed before the fifth  anniversary of the Initial Issuance Date.
         Thereafter,  the shares of this Series shall be redeemable  (subject to
         subsection 4(d) below) at the option of the Corporation, in whole or in
         part, at the  redemption  price,  which shall be an amount equal to the
         greater of (i) U.S.  $1.35 per share of this  Series plus the amount of
         any accrued and unpaid  Dividends  per share of this Series  (including
         accumulated Dividends, whether or not declared) or (ii) the Fair Market
         Value  of a share of this  Series  (as  defined  below).  For  purposes
         hereof,  the Fair Market  Value  shall be  determined  by a  nationally
         recognized  independent  investment  banking firm mutually agreed to by
         the  Corporation  and the  holder of a  majority  of the shares of this
         Series then outstanding, whose determination shall be conclusive.

                  "(b) (i) In case the Corporation  shall desire to exercise its
         right to redeem any shares of this Series, it shall give notice of such
         redemption  to holders of the shares of this  Series to be  redeemed as
         hereinafter provided in this Section 4(b).

                           "(ii)  Notice  of  redemption  shall  be given to the
                  holders  of shares of this  Series to be  redeemed  by mailing
                  such notice by  first-class  mail to their last  addresses  as
                  they

<PAGE>
                                      -9-

                  shall  appear upon the  register for the shares of this Series
                  not less than 120  calendar  days  prior to the date fixed for
                  redemption.

                           "(iii)  Each  such  notice  of  redemption  (A) shall
                  specify the date fixed for redemption and the redemption price
                  at which shares of this Series are to be  redeemed,  (B) shall
                  state that payment of the  redemption  price for the shares of
                  this  Series  to be  redeemed  will be  made at the  principal
                  executive  offices of the Corporation,  upon  presentation and
                  surrender  of  certificates  representing  such shares of this
                  Series, and (C) if less than all the shares of this Series are
                  to be  redeemed,  shall  specify  the number of shares of this
                  Series  held by  each  holder  to be  redeemed.  In  case  any
                  certificate  representing  shares  of  this  Series  is  to be
                  redeemed in part only, the notice of redemption  which relates
                  to such  certificate  shall state the number of shares of this
                  Series  represented  by such  certificate  to be redeemed  and
                  shall  state  that on and  after  the  redemption  date,  upon
                  surrender  of  such   certificate,   a  new   certificate   or
                  certificates  for a number of shares of this  Series  equal to
                  the unredeemed portion thereof will be issued.

                           "(iv) If less than all the shares of this  Series are
                  to be redeemed,  the Corporation  shall effect such redemption
                  pro rata  among the  holders  thereof  (based on the number of
                  shares  of  this   Series  held  on  the  date  of  notice  of
                  redemption).

                  "(c) (i) If the giving of notice of redemption shall have been
         completed  as provided  above,  the shares of this Series  specified in
         such  notice  shall  become  redeemable,  and shall be  redeemed by the
         Corporation   upon   presentation  and  surrender  of  the  certificate
         representing  such shares,  on the date and at the place stated in such
         notice at the  redemption  price,  and on and after such date fixed for
         redemption,  notwithstanding  that any  certificate  for shares of this
         Series so called for  redemption  shall not have been  surrendered  for
         cancellation,  unless there shall have been a default in payment of the
         redemption price, all shares of this Series called for redemption shall
         no longer be deemed to be  outstanding,  and all rights with respect to
         such shares of this Series shall forthwith  cease and terminate  except
         only the right of the holders  thereof to receive from the  Corporation
         the redemption price,  without interest,  of the shares to be redeemed,
         and such shares shall not thereafter be transferred on the books of the
         Corporation or be deemed to be outstanding for any purpose whatsoever.

                           "(ii)   Upon    presentation   of   any   certificate
                  representing shares of this Series only a portion of which are
                  to be redeemed,  the Corporation shall  immediately  issue, at
                  its expense,  a new certificate or  certificates  representing
                  the shares of this Series not redeemed.

                  "(d)  Except  as  provided  in   paragraph   (a)  above,   the
         Corporation  shall have no right to redeem  the shares of this  Series.
         Any shares of this Series so  redeemed  shall be  permanently  retired,
         shall  no  longer  be  deemed  outstanding  and  shall  not  under  any
         circumstances  be reissued,  and the  Corporation may from time to time
         take such  appropriate  corporate  action as may be necessary to reduce
         the  authorized  shares  of this  Series  accordingly.  Nothing  herein
         contained  shall  prevent or restrict the purchase by the  Corporation,
         from time to time either at public or

<PAGE>
                                      -10-

         private  sale, of the whole or any part of the shares of this Series at
         such price or prices as the Corporation  may determine,  subject to the
         provisions of applicable law.

                  "5. No Mandatory  Redemption.  The shares of this Series shall
         not be subject to mandatory redemption by the Corporation.

                  "6. Voting Rights.  (a) Each issued and  outstanding  share of
         this  Series  shall be  entitled  to the  number of votes  equal to the
         number of Common Shares of the  Corporation  into which each such share
         of this Series is  convertible  (as adjusted from time to time pursuant
         to  Section  7(a)  hereof),  at each  meeting  of  shareholders  of the
         Corporation  with  respect  to any and  all  matters  presented  to the
         shareholders  of the  Corporation  for their  action or  consideration.
         Except as provided by law, by the  provisions of paragraph (b) below or
         by the provisions  establishing  any other series of preferred stock of
         the Corporation,  holders of the shares of this Series and of any other
         outstanding  preferred  stock shall vote  together  with the holders of
         Common Shares as a single class.

                  (b) In  addition  to any other  rights  provided  by law,  the
         Corporation shall not amend,  alter or repeal the preferences,  special
         rights  or other  powers  of the  shares  of this  Series  or any other
         provision  of  the  Corporation's   constating   documents  that  would
         adversely  affect  the  rights  of the  holders  of the  shares of this
         Series,  including,  without limitation,  any increase in the number of
         shares of this Series,  without the written consent or affirmative vote
         of the holders of at least  66-2/3% of the then  outstanding  aggregate
         number  of such  adversely  affected  shares of this  Series,  given in
         writing or by vote at a meeting,  consenting or voting (as the case may
         be)  separately as a class.  For this  purpose,  the  authorization  or
         issuance  of any  series of  preferred  stock of the  Corporation  with
         preference  or priority  over,  or being on a parity with the shares of
         this  Series as to the right to  receive  either  dividends  or amounts
         distributable  upon  liquidation,  dissolution  or  winding  up of  the
         Corporation  shall be deemed to  adversely  affect  the  shares of this
         Series.

                  "7. Conversion. (a) Each share of this Series may be converted
         at any  time,  at the  option  of the  holder  thereof,  in the  manner
         hereinafter provided,  into fully-paid and nonassessable Common Shares,
         provided,  however, that on any redemption of any shares of this Series
         or any liquidation of the  Corporation,  the right of conversion  shall
         terminate  at the  close  of  business  on the full  business  day next
         preceding the date fixed for such  redemption or for the payment of any
         amounts  distributable  on  liquidation to the holders of the shares of
         this  Series.  The  initial  conversion  rate for shares of this Series
         shall be one Common Share for each one share of this Series surrendered
         for conversion,  representing an initial conversion price (for purposes
         of Section 7(g)) of U.S.  $1.35 per share of the  Corporation's  Common
         Shares (hereinafter, the "Conversion Price"). The applicable conversion
         rate and  Conversion  Price from time to time in effect are  subject to
         adjustment as hereinafter provided.

                  "(b)  Whenever  the  Conversion  Price  shall be  adjusted  as
         provided in Section 7(g) hereof,  the Corporation  shall forthwith file
         at each  office  designated  for the  conversion  of the shares of this
         Series,  a statement,  signed by any of the Chairman of the Board,  the
         President,  any Vice  President or the  Treasurer  of the  Corporation,
         showing in reasonable  detail the facts requiring such adjustment.  The
         Corporation   shall  also  cause  a  notice   setting  forth  any  such
         adjustments to be sent by mail, first class,  postage prepaid,  to each
         record holder of shares of this Series at his

<PAGE>
                                      -11-

         or its address appearing on the stock register.  If such notice relates
         to an  adjustment  resulting  from an event  referred  to in  paragraph
         7(g)(vii), such notice shall be included as part of the notice required
         to be mailed and published under the provisions of paragraph  7(g)(vii)
         hereof.

                  "(c) The right of conversion  shall be exercised by the holder
         by the surrender of the certificates representing shares of this Series
         to be converted to the  Corporation at any time during normal  business
         hours at the office or agency then  maintained by it for the conversion
         of shares of this  Series (the  "Conversion  Office"),  accompanied  by
         written notice to the Corporation of such holder's  election to convert
         and, if so required by the  Corporation or any conversion  agent, by an
         instrument of transfer,  in form satisfactory to the Corporation and to
         any conversion agent, duly executed by the registered holder or by such
         holder's  duly  authorized  attorney,  and transfer tax stamps or funds
         therefor, if required pursuant to Section 7(k).

                  "(d) As  promptly  as  practicable  after  the  surrender  for
         conversion of one or more certificates  representing any shares of this
         Series in the manner  provided in Section  7(c) and the payment in cash
         of  any  amount  required  by  the  provisions  of  Section  7(k),  the
         Corporation  will deliver or cause to be  delivered  at the  Conversion
         Office to or upon the  written  order of the holder of such  shares,  a
         certificate  or  certificates  representing  the number of full  Common
         Shares issuable upon such  conversion,  issued in such name or names as
         such  holder  may  direct,   subject  to  any  applicable   contractual
         restrictions  and any  restrictions  imposed by  applicable  securities
         laws.  Such  conversion  shall be deemed to have been made  immediately
         prior  to the  close  of  business  on the  date of such  surrender  of
         certificates  representing  shares of this  Series in proper  order for
         conversion,  and all rights of the holder of such shares as a holder of
         such  shares  shall  cease at such  time,  and the person or persons in
         whose name or names the  certificates  for such Common Shares are to be
         issued  shall be treated for all  purposes as having  become the record
         holder or holders  thereof at such time;  provided,  however,  that any
         such  surrender  on any  date  when  the  stock  transfer  books of the
         Corporation  shall be closed shall  constitute the person or persons in
         whose name or names the  certificates  for such Common Shares are to be
         issued  as the  record  holder  or  holders  thereof  for all  purposes
         immediately  prior to the close of business on the next  succeeding day
         on which such stock transfer books are opened.

                  "(e) "Upon conversion in the manner provided in this Section 7
         of only a portion of the number of shares of this Series represented by
         a certificate so surrendered  for  conversion,  the  Corporation  shall
         issue and deliver or cause to be delivered at the Conversion  Office to
         or  upon  the  written  order  of  the  holder  of the  certificate  so
         surrendered for conversion,  at the expense of the  Corporation,  a new
         certificate or certificates  representing  the number of shares of this
         Series  representing  the  unconverted  portion of the  certificate  so
         surrendered,  issued in such name or names as such  holder may  direct,
         subject to any applicable contractual restrictions and any restrictions
         imposed by applicable securities laws.

                  "(f)  All  shares  of  this  Series   which  shall  have  been
         surrendered for conversion as herein provided shall no longer be deemed
         to be outstanding and all rights with respect to such shares, including
         the rights,  if any, to receive  notices and to vote,  shall  forthwith
         cease and  terminate  except  only the right of the  holder  thereof to
         receive Common Shares in exchange  therefor.  Any shares of this Series
         so  converted  shall be retired and canceled and shall not be

<PAGE>
                                      -12-

         reissued,  and  the  Corporation  may  from  time  to  time  take  such
         appropriate  action as may be necessary to reduce the authorized shares
         of this Series accordingly.

                  (g) Anti-Dilution Provisions.

                  (i)  In  order  to  prevent  dilution  of  the  right  granted
hereunder, the Conversion Price shall be subject to adjustment from time to time
in accordance  with this  paragraph  7(g)(i).  At any given time the  Conversion
Price  shall be that  dollar (or part of a dollar)  amount the  payment of which
shall be  sufficient  at the  given  time to  acquire  one  Common  Share of the
Corporation  upon  conversion of shares of this Series.  Upon each adjustment of
the Conversion  Price  pursuant to this Section 7(g),  the registered  holder of
shares of this Series shall thereafter be entitled to acquire upon exercise,  at
the Conversion Price resulting from such adjustment, the number of Common Shares
of the  Corporation  obtainable by multiplying  the  Conversion  Price in effect
immediately prior to such adjustment by the number of shares of Common Shares of
the Corporation acquirable immediately prior to such adjustment and dividing the
product  thereof by the Conversion  Price  resulting from such  adjustment.  For
purposes  of this  Section  7(g),  the term  "Number  of  Common  Shares  Deemed
Outstanding" at any given time shall mean the sum of (x) the number of shares of
the  Corporation's  Common Shares  outstanding  at such time,  (y) the number of
Common Shares of the Corporation  issuable  assuming  conversion at such time of
all  outstanding  shares  of  the  Corporation's  other  series  of  convertible
preferred  stock, if any, and (z) the number of Common Shares of the Corporation
deemed to be  outstanding at such time under  subparagraphs  7(g)(ii)(1) to (8),
inclusive.

                  (ii)  Except as provided in  paragraph  7(g)(iii)  or 7(g)(vi)
below,  if and whenever on or after the Initial  Issuance Date, the  Corporation
shall issue or sell, or shall in accordance  with  subparagraphs  7(g)(ii)(1) to
(8), inclusive, be deemed to have issued or sold (such issuance or sale, whether
actual  or  deemed,  the  "Triggering  Transaction")  any  Common  Shares  for a
consideration per share less than

                  (I) (if the Common Shares are not traded on the New York Stock
         Exchange,  the American Stock Exchange or the Nasdaq  National  Market)
         the Conversion  Price in effect  immediately  prior to the time of such
         issuance  or  sale,  then  forthwith  upon  such  issuance  or sale the
         Conversion  Price shall,  subject to  subparagraphs  (1) to (8) of this
         Section 7(g)(ii), be reduced to the Conversion Price (calculated to the
         nearest tenth of a cent) determined by dividing: (i) an amount equal to
         the sum of (x) the product  derived by multiplying the Number of Common
         Shares  Deemed   Outstanding   immediately  prior  to  such  Triggering
         Transaction  by the  Conversion  Price  then in  effect,  plus  (y) the
         consideration,  if any,  received by the Company upon  consummation  of
         such Triggering Transaction,  by (ii) an amount equal to the sum of (x)
         the Number of Common Shares  Deemed  Outstanding  immediately  prior to
         such Triggering Transaction plus (y) the number of Common Shares issued
         (or deemed to be issued in accordance with subparagraphs 7(g)(ii)(1) to
         (8)) in connection with the Triggering Transaction; or

                  (II) (if the  Common  Shares  are traded on the New York Stock
         Exchange,  the American Stock Exchange or the Nasdaq  National  Market)
         the average Market Price for the ten trading days immediately preceding
         such issuance or sale, then forthwith upon such Triggering Transaction,
         the Conversion Price shall, subject to subparagraphs (1) to (8) of this
         Section 7(g)(ii),

<PAGE>
                                      -13-

         be reduced to the Conversion Price  (calculated to the nearest tenth of
         a cent)  determined  by  multiplying  the  Conversion  Price in  effect
         immediately  prior  to the  time of such  Triggering  Transaction  by a
         fraction,  the numerator of which shall be the sum of (x) the Number of
         Common Shares Deemed  Outstanding  immediately prior to such Triggering
         Transaction  and (y) the number of Common  Shares  which the  aggregate
         consideration  received by the Company upon such Triggering Transaction
         would  purchase at the average  Market  Price for the ten trading  days
         immediately preceding such Triggering Transaction,  and the denominator
         of which  shall be the  Number  of  Common  Shares  Deemed  Outstanding
         immediately after such Triggering Transaction.

                  For  purposes of  determining  the adjusted  Conversion  Price
under this paragraph 7(g)(ii),  the following subsections (1) to (8), inclusive,
shall be applicable:

                           (1) In case the  Corporation at any time shall in any
                  manner  grant  (whether   directly  or  by  assumption  in  an
                  amalgamation  or otherwise)  any rights to subscribe for or to
                  purchase, or any options for the purchase of, Common Shares or
                  any stock or other securities convertible into or exchangeable
                  for Common  Shares (such rights or options being herein called
                  "Options"  and  such  convertible  or  exchangeable  stock  or
                  securities  being  herein  called  "Convertible  Securities"),
                  whether  or not  such  Options  or the  right  to  convert  or
                  exchange  any  such  Convertible  Securities  are  immediately
                  exercisable,  and the price  per  share  for which the  Common
                  Shares are  issuable  upon  exercise,  conversion  or exchange
                  (determined by dividing (x) the total amount, if any, received
                  or  receivable by the  Corporation  as  consideration  for the
                  granting  of  such  Options,  plus  the  aggregate  amount  of
                  additional  consideration  payable to the Corporation upon the
                  exercise  of all  such  Options,  plus,  in the  case  of such
                  Options which relate to Convertible Securities,  the aggregate
                  amount of additional  consideration,  if any, payable upon the
                  issue  or sale of such  Convertible  Securities  and  upon the
                  conversion  or  exchange  thereof,  by (y) the  total  maximum
                  number of Common  Shares  issuable  upon the  exercise of such
                  Options or the  conversion  or  exchange  of such  Convertible
                  Securities)  shall be less than the  average  Market  Price in
                  effect for the ten trading days immediately  prior to the time
                  of the  granting  of such  Option  (if the  Common  Shares are
                  traded on the New York  Stock  Exchange,  the  American  Stock
                  Exchange  or the Nasdaq  National  Market)  or the  Conversion
                  Price in effect immediately prior to the time of such issuance
                  or sale (if the  Common  Shares are not traded on the New York
                  Stock  Exchange,  the  American  Stock  Exchange or the Nasdaq
                  National  Market),  then the  total  maximum  amount of Common
                  Shares  issuable  upon the exercise of such Options or, in the
                  case  of  Options  for   Convertible   Securities,   upon  the
                  conversion or exchange of such Convertible  Securities,  shall
                  (as of the date of granting  of such  Options) be deemed to be
                  outstanding   and  to  have  been   issued  and  sold  by  the
                  Corporation  for such price per share.  No  adjustment  of the
                  Conversion  Price  shall be made upon the actual  issuance  of
                  such Common  Shares or such  Convertible  Securities  upon the
                  exercise  of such  Options,  except as  otherwise  provided in
                  subparagraph (3) below.

                           (2) In case the  Corporation at any time shall in any
                  manner  issue  (whether   directly  or  by  assumption  in  an
                  amalgamation or otherwise) or sell any Convertible Securities,
                  whether or not the rights to  exchange  or convert  thereunder
                  are immediately

<PAGE>
                                      -14-

                  exercisable,  and the price per share for which Common  Shares
                  are issuable upon such  conversion or exchange  (determined by
                  dividing (x) the total amount  received or  receivable  by the
                  Corporation  as  consideration  for the  issue or sale of such
                  Convertible   Securities,   plus  the   aggregate   amount  of
                  additional  consideration,  if any, payable to the Corporation
                  upon the  conversion  or  exchange  thereof,  by (y) the total
                  maximum  number of Common Shares  issuable upon the conversion
                  or exchange of all such Convertible  Securities) shall be less
                  than the  average  Market  Price  in  effect  for the  ten-day
                  trading period  immediately prior to the time of such issue or
                  sale (if the  Common  Shares  are traded on the New York Stock
                  Exchange,  the American Stock Exchange or the Nasdaq  National
                  Market) or the Conversion Price in effect immediately prior to
                  the time of such  issuance  or sale (if the Common  Shares are
                  not traded on the New York Stock Exchange,  the American Stock
                  Exchange  or the  Nasdaq  National  Market),  then  the  total
                  maximum  number of Common Shares  issuable upon  conversion or
                  exchange of all such  Convertible  Securities shall (as of the
                  date of the issue or sale of such  Convertible  Securities) be
                  deemed to be  outstanding  and to have been issued and sold by
                  the Corporation for such price per share. No adjustment of the
                  Conversion  Price  shall be made upon the actual  issuance  of
                  such Common  Shares upon exercise of the rights to exchange or
                  convert under such Convertible Securities, except as otherwise
                  provided in subparagraph (3) below.

                           (3) If the purchase price provided for in any Options
                  referred to in subparagraph (1), the additional consideration,
                  if  any,  payable  upon  the  conversion  or  exchange  of any
                  Convertible  Securities  referred to in  subparagraphs  (1) or
                  (2), or the rate at which any Convertible  Securities referred
                  to  in  subparagraph  (1)  or  (2)  are  convertible  into  or
                  exchangeable for Common Shares shall change at any time (other
                  than  under or by reason of  provisions  designed  to  protect
                  against dilution of the type set forth in paragraphs  7(g)(ii)
                  or 7(g)(iv)),  the  Conversion  Price in effect at the time of
                  such change shall  forthwith be readjusted  to the  Conversion
                  Price  which  would  have been in effect at such time had such
                  Options or Convertible  Securities still outstanding  provided
                  for such changed purchase price,  additional  consideration or
                  rate,  as the case  may be,  at the  time  initially  granted,
                  issued or sold.  If the  purchase  price  provided  for in any
                  Option  referred to in  subparagraph  (1) or the rate at which
                  any Convertible Securities referred to in subparagraphs (1) or
                  (2) are convertible  into or  exchangeable  for Common Shares,
                  shall be reduced at any time under or by reason of  provisions
                  with respect  thereto  designed to protect  against  dilution,
                  then  in  case of the  delivery  of  Common  Shares  upon  the
                  exercise of any such Option or upon  conversion or exchange of
                  any such  Convertible  Security,  the Conversion Price then in
                  effect   hereunder   shall   forthwith  be  adjusted  to  such
                  respective  amount as would have been obtained had such Option
                  or  Convertible  Security  never been issued as to such Common
                  Shares and had adjustments  been made upon the issuance of the
                  Common Shares delivered as aforesaid,  but only if as a result
                  of  such  adjustment  the  Conversion  Price  then  in  effect
                  hereunder is hereby reduced.

                           (4)  On  the   expiration   of  any   Option  or  the
                  termination   of  any  right  to  convert  or   exchange   any
                  Convertible  Securities,  the Conversion  Price then in effect
                  hereunder shall forthwith be increased to the Conversion Price
                  which would have been in effect at the time of such expiration
                  or termination had such Option or Convertible Securities, to

<PAGE>
                                      -15-

                  the extent outstanding immediately prior to such expiration or
                  termination, never been issued.

                           (5) In case any Options shall be issued in connection
                  with the issue or sale of other securities of the Corporation,
                  together  comprising  one  integral  transaction  in  which no
                  specific  consideration  is  allocated  to such Options by the
                  parties  thereto,  such  Options  shall be deemed to have been
                  issued without consideration.

                           (6) In case any Common Shares, Options or Convertible
                  Securities  shall be  issued  or sold or  deemed  to have been
                  issued or sold for cash, the  consideration  received therefor
                  shall be deemed to be the amount  received by the  Corporation
                  therefor  (before  deduction  for  expenses  or  underwriters'
                  discounts or  commissions  related to such issue or sale).  In
                  case any  Common  Shares,  Options or  Convertible  Securities
                  shall be issued or sold for a  consideration  other than cash,
                  the amount of the  consideration  other than cash  received by
                  the Corporation shall be the fair value of such  consideration
                  as  determined  in good faith by the Board of Directors of the
                  Corporation.

                           (7) In case the Corporation  shall declare a dividend
                  or make any other  distribution  upon the share capital of the
                  Corporation payable in Common Shares,  Options, or Convertible
                  Securities,  then in such case any Common  Shares,  Options or
                  Convertible  Securities,  as the  case  may  be,  issuable  in
                  payment of such  dividend or  distribution  shall be deemed to
                  have been issued or sold without consideration.

                           (8) For purposes of this paragraph 7(g)(ii),  in case
                  the  Corporation  shall  take a record of the  holders  of its
                  Common Shares for the purpose of entitling them (x) to receive
                  a dividend  or other  distribution  payable in Common  Shares,
                  Options or in Convertible Securities,  or (y) to subscribe for
                  or purchase Common Shares, Options or Convertible  Securities,
                  then such  record  date  shall be deemed to be the date of the
                  issue or sale of the Common  Shares deemed to have been issued
                  or sold upon the declaration of such dividend or the making of
                  such other  distribution  or the date of the  granting of such
                  right or subscription or purchase, as the case may be.

                  (iii) In the event the  Corporation  shall  declare a dividend
upon the Common Shares (other than a dividend  payable in Common Shares  covered
by subparagraph  7(g)(ii)(7))  payable  otherwise than out of earnings or earned
surplus, determined in accordance with generally accepted accounting principles,
including the making of appropriate  deductions for minority interests,  if any,
in subsidiaries (herein referred to as "Liquidating  Dividends"),  then, as soon
as possible after the conversion of any shares of this Series,  the  Corporation
shall,  subject to applicable  law, pay to the person  converting such shares of
this Series an amount equal to the aggregate  value at the time of such exercise
of all  Liquidating  Dividends  (including  but not limited to the Common Shares
which would have been issued at the time of such earlier  exercise and all other
securities  which would have been issued with  respect to such Common  Shares by
reason of stock splits,  stock dividends,  amalgamations or reorganizations,  or
for any other reason). For the purposes of this paragraph 7(g)(iii),  a dividend
other than in cash shall be considered payable out of earnings or earned surplus
only to the extent that such  earnings  or earned  surplus are charged an amount
equal to the fair  value of such  dividend  as  determined  in good faith by the
Board.

<PAGE>
                                      -16-

                  (iv) In case  the  Corporation  shall  at any  time  subdivide
(other than by means of a dividend payable in Common Shares covered by paragraph
7(g)(ii)(7)) its outstanding  Common Shares into a greater number of shares, the
Conversion  Price  in  effect  immediately  prior to such  subdivision  shall be
proportionately reduced, and, conversely,  in case the outstanding Common Shares
of the  Corporation  shall be  combined  into a smaller  number of  shares,  the
Conversion  Price  in  effect  immediately  prior to such  combination  shall be
proportionately increased.

                  (v) If any capital  reorganization or  reclassification of the
share  capital of the  Corporation,  or  amalgamation  of the  Corporation  with
another  corporation,  or the sale of all or substantially  all of its assets to
another  corporation  shall be  effected  in such a way that  holders  of Common
Shares shall be entitled to receive  stock,  securities,  cash or other property
with respect to or in exchange for Common  Shares,  then, as a condition of such
reorganization,  reclassification,  amalgamation  or sale,  lawful and  adequate
provision  shall be made whereby the holders of shares of this Series shall have
the right to acquire and receive upon  conversion  of the shares of this Series,
which  right  shall be prior to the rights of the  holders  of stock  ranking on
liquidation  junior to this  Series  (but  after and  subject  to the  rights of
holders of Senior Preferred Shares,  if any), such shares of stock,  securities,
cash or other  property  issuable  or  payable  (as part of the  reorganization,
reclassification,  amalgamation or sale) with respect to or in exchange for such
number of  outstanding  Common  Shares  of the  Corporation  as would  have been
received upon  conversion of the shares of this Series at the  Conversion  Price
then in effect.  The Corporation will not effect any such  amalgamation or sale,
unless prior to the  consummation  thereof the  amalgamated  corporation  or the
corporation  purchasing such assets shall assume by written instrument mailed or
delivered  to the  holders of the shares of this  Series at the last  address of
each such holder  appearing on the books of the  Corporation,  the obligation to
deliver to each such holder such  shares of stock,  securities  or assets as, in
accordance  with the  foregoing  provisions,  such  holder  may be  entitled  to
receive. If a purchase,  tender or exchange offer is made to and accepted by the
holders of more than 50% of the  outstanding  Common Shares of the  Corporation,
the Corporation shall not effect any amalgamation or sale with the person having
made such offer or with any Affiliate (as defined below) of such person,  unless
prior to the consummation of such amalgamation or sale the holders of the shares
of this Series shall have been given a reasonable  opportunity  to then elect to
receive  upon the  conversion  of the  shares of this  Series  either the stock,
securities  or assets then  issuable  with  respect to the Common  Shares of the
Corporation or the stock,  securities or assets,  or the  equivalent,  issued to
previous  holders  of the  Common  Shares in  accordance  with such  offer.  For
purposes  hereof,  the term  "Affiliate"  with respect to any given person shall
mean any person  controlling,  controlled  by or under  common  control with the
given person.

                  (vi) The  provisions  of this  Section 7(g) shall not apply to
any Common Shares issued,  issuable or deemed  outstanding  under  subparagraphs
7(g)(ii)(1)  to (8) inclusive:  (i) to any person  pursuant to any stock option,
stock  purchase or similar plan or  arrangement  for the benefit of employees of
the Corporation or its  subsidiaries  in effect on the Initial  Issuance Date or
thereafter  adopted by the Board of Directors of the Corporation,  (ii) pursuant
to options,  warrants and conversion rights in existence on the Initial Issuance
Date,  (iii) upon exercise of the warrants of the Corporation  issued to Warburg
pursuant to the Warrant  Agreement or (iv) on  conversion  of the shares of this
Series or the sale of any additional shares of this Series.

                  (vii) In the event that:
<PAGE>
                                      -17-

                  (1) the  Corporation  shall declare any cash dividend upon its
         Common Shares, or


                  (2) the Corporation shall declare any dividend upon its Common
         Shares  payable  in  stock  or  make  any  special  dividend  or  other
         distribution to the holders of its Common Shares, or

                  (3) the Corporation  shall offer for  subscription pro rata to
         the holders of its Common Shares any additional  shares of stock of any
         class or other rights, or

                  (4)   there   shall   be   any   capital   reorganization   or
         reclassification of the share capital of the Corporation, including any
         subdivision  or  combination  of  its  outstanding  Common  Shares,  or
         amalgamation of the Corporation  with, or sale of all or  substantially
         all of its assets to, another corporation, or

                  (5) there shall be a  voluntary  or  involuntary  dissolution,
         liquidation or winding up of the Corporation;

then, in connection with such event,  the Corporation  shall give to the holders
of the shares of this Series:

                  (A)      at least  twenty (20) days' prior  written  notice of
                           the date on which the books of the Corporation  shall
                           close or a record  shall be taken for such  dividend,
                           distribution   or   subscription    rights   or   for
                           determining  rights  to vote in  respect  of any such
                           reorganization, reclassification, amalgamation, sale,
                           dissolution, liquidation or winding up; and

                  (B)      in   the   case   of   any    such    reorganization,
                           reclassification,  amalgamation,  sale,  dissolution,
                           liquidation or winding up, at least twenty (20) days'
                           prior written  notice of the date when the same shall
                           take place.

Such notice in accordance with the foregoing  clause (A) shall also specify,  in
the case of any such dividend,  distribution or subscription rights, the date on
which the holders of Common Shares shall be entitled thereto, and such notice in
accordance  with the  foregoing  clause (B) shall also specify the date on which
the holders of Common  Shares shall be entitled to exchange  their Common Shares
for  securities  or  other  property   deliverable  upon  such   reorganization,
reclassification, amalgamation, sale, dissolution, liquidation or winding up, as
the case may be. Each such  written  notice  shall be given by first class mail,
postage  prepaid,  addressed  to the holders of the shares of this Series at the
address of each such holder as shown on the books of the Corporation.

                  (viii)  If at any time or from  time to time on or  after  the
Initial Issuance Date, the Corporation  shall grant,  issue or sell any Options,
Convertible  Securities or rights to purchase  property (the "Purchase  Rights")
pro rata to the record holders of the Common Shares of the  Corporation and such
grants,  issuances  or sales do not result in an  adjustment  of the  Conversion
Price under paragraph 7(g)(ii) hereof, then each holder of shares of this Series
shall be entitled to acquire  (within  thirty (30) days after the later to occur
of the initial  exercise date of such Purchase  Rights or receipt by such holder
of the notice

<PAGE>
                                      -18-

concerning  Purchase  Rights  to  which  such  holder  shall be  entitled  under
paragraph  7(g)(vii))  and upon the terms  applicable  to such  Purchase  Rights
either:

                  (A)      the aggregate Purchase Rights which such holder could
                           have  acquired  if it had held the  number  of Common
                           Shares  acquirable  upon conversion of shares of this
                           Series immediately before the grant, issuance or sale
                           of  such  Purchase  Rights;   provided  that  if  any
                           Purchase Rights were distributed to holders of Common
                           Shares    without   the    payment   of    additional
                           consideration by such holders, corresponding Purchase
                           Rights shall be distributed to the exercising holders
                           of the  shares  of this  Series  as soon as  possible
                           after such exercise and it shall not be necessary for
                           the  exercising  holder of the shares of this  Series
                           specifically to request delivery of such rights; or

                  (B)      in the event that any such Purchase Rights shall have
                           expired  or  shall  expire  prior  to the end of said
                           thirty (30) day period,  the number of Common  Shares
                           or the amount of  property  which such  holder  could
                           have acquired upon such exercise at the time or times
                           at which the Corporation granted, issued or sold such
                           expired Purchase Rights.

                  (ix) If any event  occurs as to which,  in the  opinion of the
Board,  the  provisions  of this Section 7(g) are not strictly  applicable or if
strictly  applicable  would not fairly  protect the rights of the holders of the
shares of this Series in accordance with the essential  intent and principles of
such  provisions,  then the Board shall make an adjustment in the application of
such provisions,  in accordance with such essential intent and principles, so as
to protect such rights as aforesaid,  but in no event shall any adjustment  have
the effect of increasing the Conversion Price as otherwise  determined  pursuant
to  any of the  provisions  of  this  Section  7(g)  except  in  the  case  of a
combination of shares of a type  contemplated in paragraph  7(g)(iv) and then in
no event to an amount larger than the Conversion  Price as adjusted  pursuant to
paragraph 7(g)(iv).

                  "(h) No  fractional  Common  Shares  shall be issued  upon the
         conversion  of any share or shares of this  Series.  If any  fractional
         interest in a Common Share  would,  except for the  provisions  of this
         Section 7(h), be deliverable upon the conversion of any share or shares
         of this  Series,  the  Corporation  shall  in lieu  of  delivering  the
         fractional  Common Share therefor  satisfy such fractional  interest by
         payment  to the  holder  of such  surrendered  share or  shares of this
         Series of an amount in cash equal (computed to the nearest cent) to the
         current market value of such fractional interest, computed on the basis
         of  the  Market  Price  of  the  Common  Shares  on the  date  of  such
         conversion,  provided,  however,  that no  amount  shall be paid by the
         Corporation to such holder of less than U.S. $5.00.

                  "(i) The Corporation shall be entitled to effect the mandatory
         conversion,  in whole or in  part,  of the  shares  of this  Series  in
         accordance with this Section 7 if all of the Triggering Conditions (set
         forth in Section 2(b) hereof) shall have been  satisfied as of the date
         of the notice described  below.  Upon such mandatory  conversion,  each
         share of this Series subject to such conversion shall be converted into
         Common Shares at the then effective  Conversion  Price for such shares.
         In case the  Corporation  shall desire to exercise the right to convert
         all or, as the case may

<PAGE>
                                      -19-

         be, any shares of this Series in accordance with the right to do so, it
         shall provide  notice to the holders of the shares of this Series to be
         converted as hereinafter provided in this Section 7(i).

                           "(i) A  notice  of  conversion  shall be given to the
         holders  of  shares  of this  Series  to be  converted  by  mailing  by
         first-class  mail to their last addresses as they shall appear upon the
         register  for  shares of this  Series not less than 120  calendar  days
         prior to the date fixed for conversion.

                           "(ii)  Each  such  notice  of  conversion  (A)  shall
         specify the date fixed for  conversion  and the number of Common Shares
         issuable to the holder of a share of this Series upon such  conversion,
         (B)  shall  state the  offices  or  agencies  to be  maintained  by the
         Corporation for the purpose of such conversion,  upon  presentation and
         surrender  of such  shares of this  Series and (C) if less than all the
         shares of this Series are to be converted,  shall specify the number of
         shares of this Series held by each  holder,  and the serial  numbers of
         the  certificates  thereof,  to be converted.  In case any  certificate
         representing shares of this Series is to be converted in part only, the
         notice of conversion which relates to such certificate  shall state the
         number of shares of this Series  represented by such  certificate to be
         converted and shall state that on and after the conversion  date,  upon
         surrender of such certificate,  a new certificate or certificates for a
         number  of  shares  of this  Series  equal to the  unconverted  portion
         thereof will be issued.

                  "(j)  The  Corporation  will at all  times  reserve  and  keep
         available,  solely for the  purposes of the  issuance of Common  Shares
         upon conversion of the shares of this Series, the full number of Common
         Shares as shall be issuable upon the conversion of all such outstanding
         shares of this Series.

                  "The  Corporation  will endeavor to comply with all securities
         laws regulating the offer and delivery of Common Shares upon conversion
         of the shares of this Series and, that if any Common Shares required to
         be reserved for purposes of conversion of the shares hereunder  require
         registration  with or approval of any governmental  authority under any
         U.S.  (federal or state) or Canadian law before such Common  Shares may
         be validly issued or delivered upon conversion,  the Corporation  will,
         in good faith and as expeditiously as possible, endeavor to secure such
         registration or approval, as the case may be.

                  "All Common  Shares which shall be issued upon  conversion  of
         the  shares  of this  Series  will  upon  issuance  be  fully  paid and
         nonassessable and not subject to preemptive rights.

                  "(k) The  issuance  of  certificates  for Common  Shares  upon
         conversion  of shares of this Series shall be made  without  charge for
         any stamp or other similar tax in respect of such issuance. However, if
         any such  certificate  is to be issued in a name other than that of the
         holder of record  of the share or shares of this  Series so  converted,
         the holder thereof shall pay to the  Corporation  the amount of any tax
         which may be  payable  in  respect  of any  transfer  involved  in such
         issuance or shall establish to the satisfaction of the Corporation that
         such tax has been paid or is not payable.

<PAGE>
                                      -20-

                  "(l) In case (A) the  Corporation  shall take any action which
         would require an adjustment in the number of Common Shares  issuable to
         holders of shares of this Series upon  conversion  thereof  pursuant to
         Section 7(g) above;  or (B) there shall be a voluntary  or  involuntary
         dissolution,   liquidation   or  winding  up  of  the  affairs  of  the
         Corporation;

         then the  Corporation  shall  cause to be given to the  holders  of the
         shares of this Series at least ten days prior to the applicable  record
         date hereinafter  specified, a notice of (X) the date on which a record
         is to be taken for the purpose of any dividend,  distribution  or grant
         to holders of Common Shares which would require such an adjustment, or,
         if a record is not to be taken,  the date as of which  the  holders  of
         Common Shares of record to be entitled to such dividend,  distribution,
         or  grant  are  to  be  determined  or  (Y)  the  date  on  which  such
         reorganization,   reclassification,   amalgamation,   sale,   transfer,
         dissolution, liquidation or winding up is expected to become effective,
         and the date as of which it is expected  that holders of Common  Shares
         of record  shall be  entitled  to  exchange  their  Common  Shares  for
         securities  or other  property or other  assets  deliverable  upon such
         reorganization,   reclassification,   amalgamation,   sale,   transfer,
         dissolution, liquidation, or winding up. Failure to give such notice or
         any defect  therein  shall not affect the  legality  or validity of any
         proceedings described in subparagraphs (A) or (B) of this Section 7(l).

                  "8. Hold Period. A holder of shares of this Series shall in no
event sell or otherwise transfer any of the shares of this Series, or any Common
Shares issued upon the due conversion of any shares of this Series, for a period
of six months from the Initial  Issuance  Date. The  Corporation  shall issue or
cause to be  issued  certificates  representing  shares of this  Series,  and of
Common  Shares issued upon due  conversion  of any shares of this Series,  which
contain such legends as the  Corporation  in its  discretion  deems  adequate to
reflect the hold period described in this Section 8.

                  "9. Miscellaneous.

                  "(a) For the purposes hereof:

                           "(i) the term  "outstanding",  when used in reference
                  to shares of this  Series,  shall mean  issued  shares of this
                  Series, excluding shares of this Series called for redemption;
                  and

                           "(ii) the term "subsidiary"  shall mean any company a
                  majority of whose outstanding voting capital stock (other than
                  directors'  qualifying  shares),  at the time as of which  any
                  determination  is being made,  shall be owned by the parent of
                  such company  either  directly or through other  subsidiaries;
                  and

                           "(iii)  any  shares of a series or class of shares of
                  the Corporation shall be deemed to rank:

                                    "(A) prior to shares of this Series, whether
                           or not the dividend rates,  dividend payment dates or
                           redemption or liquidation prices per share thereof be
                           different from those of shares of this Series, if the
                           holders of such shares of a series or class of shares
                           shall be entitled to receipt from the  Corporation of
<PAGE>
                                      -21-

                           dividends   or   of   amounts    distributable   upon
                           liquidation, dissolution or winding up, in preference
                           or priority to the holders of shares of this  Series,
                           as the case may be;

                                    "(B) on a parity  with or equal to shares of
                           this  Series,  whether  or not  the  dividend  rates,
                           dividend  payment dates or redemption or  liquidation
                           prices per share  thereof be different  from those of
                           shares of this Series,  if the holders of such shares
                           of a series or class of shares  shall be  entitled to
                           the receipt from the  Corporation  of dividends or of
                           amounts   distributable  upon  liquidation  to  their
                           respective  dividend  rates  or  liquidation  prices,
                           without  preference or priority one over the other as
                           between  the  holders  of such  shares of a series or
                           class of  shares  and the  holders  of shares of this
                           Series; and

                                    "(C)  subordinate  to shares of this Series,
                           whether or not the dividend rates,  dividend  payment
                           dates or redemption or  liquidation  prices per share
                           thereof  be  different  from  those of shares of this
                           Series,  if the rights of the  holders of such shares
                           of a series or class of shares  shall be  subordinate
                           to the rights of the holders of shares of this Series
                           in respect of the  receipt  from the  Corporation  of
                           dividends   and   of   amounts   distributable   upon
                           liquidation,  dissolution  or winding up,  including,
                           without   limitation,   the  Common   Shares  of  the
                           Corporation.

                  "(b) So long as any shares of this Series are outstanding,  in
         the  event  of any  conflict  between  the  provisions  hereof  and any
         corporate  document of the Corporation  (both as presently  existing or
         hereafter amended and supplemented) the provisions  hereof, as the same
         may be amended or supplemented, shall be and remain controlling.

                  "(c) The  holders of the shares of this  Series  shall have no
         preemptive rights.

<PAGE>

                                  SCHEDULE "B"

On July 27, 1993, the Corporation was incorporated pursuant to the provisions of
the Business  Corporations  Act  (Alberta)  (the "ABCA")  under the name "575035
Alberta Ltd.".

On November 18, 1993, the  Corporation  filed Articles of Amendment  pursuant to
the ABCA changing its name to "Adventure  Capital  Corporation" and removing its
private company restrictions.

On January 26, 1994, the Corporation filed Articles of Amendment pursuant to the
ABCA  reorganizing  its  share  capital,   deleting  the  authorized  Redeemable
Preferred  Shares  of the  Corporation  and  altering  the  rights,  privileges,
restrictions  and  conditions  attached to the  authorized  Common Shares of the
Corporation.

On October 12, 1994, the Corporation filed Articles of Amendment pursuant to the
ABCA changing its name to "HealthCare Capital Corp.".

On January 31, 1997, the Corporation filed Articles of Amendment pursuant to the
ABCA  authorizing  the  creation of an  unlimited  number of  Preferred  Shares,
issuable in series.

On December 16, 1997, the  Corporation  filed Articles of Amendment  pursuant to
the ABCA creating its first series of preferred  shares  designated as "Series A
Convertible Preferred Shares".

On February 9, 1998, the Corporation filed Articles of Amendment pursuant to the
ABCA  changing its  corporate  name to "Sonus  Corp." and changing  each one (1)
Common  Share  of the  Corporation  into  one-fifth  (1/5)  of a  Common  Share.
Concurrently,  the Corporation was required re-state its Articles, a requirement
of the Registrar of Corporations to accommodate the implementation of the online
electronic filing system in Alberta, administered by Alberta Registries (CORES).

<PAGE>

                                  SCHEDULE "C"

i)       Meetings of  shareholders  of the Corporation may be held in the Yukon,
         in Vancouver,  British Columbia or in Portland,  Oregon,  U.S.A. as the
         directors may designate in the notice relating to such meeting.

ii)      Subject  to the  provisions  of the  Business  Corporations  Act (Yukon
         Territories),  the directors  may,  between  annual  general  meetings,
         appoint one or more  additional  directors of the  Corporation to serve
         until the next annual  general  meeting,  but the number of  additional
         directors  shall  not at any time  exceed  one  third of the  number of
         directors who held office at the  expiration of the last annual meeting
         of the Corporation.
<PAGE>
                        YUKON BUSINESS CORPORATIONS ACT

                              (SECTION 30 OR 179)

                                                                       Form 5-01

                                                           ARTICLES OF AMENDMENT

--------------------------------------------------------------------------------

1.   Name of Corporation:     SONUS CORP.

--------------------------------------------------------------------------------

2.   Corporate Access No:     26907

--------------------------------------------------------------------------------

3.   The Articles of the above-named corporation are amended pursuant to a Court
     Order:

     Yes ------     No --X--

--------------------------------------------------------------------------------

4.   The Articles of the above-named corporation are amended as follows:

              The Terms of Series B Convertible  Preferred  Shares  (without par
              value)  hereto  annexed  are  attached  to and  form  part  of the
              Articles of Corporation.

--------------------------------------------------------------------------------

5.   Date                          Signature                Title

     October 1, 1999               /s/ Rodney Snow          Solicitor

--------------------------------------------------------------------------------

                                                                           FILED
                                                                      OCT 1 1999
                                                            [ILLEGIBLE INITIALS]
                                                                DEPUTY REGISTRAR
                                                                 OF CORPORATIONS

<PAGE>

                                   SONUS CORP.

                 TERMS OF SERIES B CONVERTIBLE PREFERRED SHARES
                               (Without Par Value)


     "1. Number and Designation.  The number of shares to constitute this series
shall be  2,500,000  and the  designation  of such shares shall be the "Series B
Convertible Preferred Shares" (hereinafter called "this Series").  The number of
shares  constituting this Series may be decreased from time to time by action of
the Board,  but not below the number of shares of this Series then  outstanding.
All shares of this Series  shall be identical  with each other in all  respects.
The shares of this Series  shall rank senior to the common  shares (the  "Common
Shares")  of the  Corporation  and equal to the Series A  Convertible  Preferred
Shares ("Series A Convertible Shares") as to dividends and upon liquidation,  as
described  below.  Any amounts  herein  referencing  share  prices or numbers of
shares  shall be subject to  appropriate  adjustments  in the event of any stock
splits, consolidations or the like.

     "2. Dividend Rights.

     "(a) Subject to the  provisions of this Section 2, the holders of shares of
this Series shall be entitled to receive, when and as declared by the Board, out
of any funds  legally  available  therefor,  preferential  cumulative  dividends
("Dividends") (i) at a rate per annum per share equal to eight percent (8.0%) of
the Conversion  Price (as hereinafter  defined),  payable as provided in Section
2(b)  hereof,  through  October 31,  2004;  (ii) from  November 1, 2004  through
October 31, 2005; at a rate per annum per share equal to twelve percent  (12.0%)
of the Conversion Price,  payable in U.S.  dollars;  (iii) from November 1, 2005
through October 31, 2006, at a rate per annum per share equal to fifteen percent
(15.0%) of the  Conversion  Price,  payable in U.S.  dollars;  and (iv) from and
after November 1, 2006, at a rate per annum per share equal to eighteen  percent
(18.0%) of the  Conversion  Price,  payable  in U.S.  dollars.  Full  cumulative
Dividends  shall be paid before any dividends  shall be set apart for or paid in
any year upon the Common  Shares or any other  shares  ranking  as to  dividends
junior to this Series  (such Common  Shares and other  shares being

<PAGE>

referred to hereinafter  collectively as "Junior Stock").  Accruals of Dividends
under Section 2(b)(i) shall not bear interest.  All Dividends  declared upon the
shares of this Series shall be declared pro rata per share.

     "(b) (i) No  Dividends  on this Series will be declared  until  October 31,
2000.  At such time, if the  Corporation's  EBTA, as reported in or derived from
the  Corporation's   annual  report  filed  with  the  Securities  and  Exchange
Commission, for the fiscal year ended July 31, 2000, is equal to or greater than
U.S. $0.20  (excluding CFO Costs) per fully diluted Common Share, as measured to
include Common Shares  issuable upon the conversion of the shares of this Series
and the Series A Convertible  Shares but to exclude the Common  Shares  issuable
upon the exercise of the Warburg  Warrants (the "Fully Diluted Common  Shares"),
then the holders of shares of this Series  shall be entitled to receive when and
as declared by the Board out of assets legally available  therefor a Dividend in
respect of the period  beginning on the Initial Issuance Date (as defined below)
and  ending on October  31,  2000,  and each  quarter  thereafter,  in each case
payable in U.S.  dollars,  before any  dividends  shall be set apart for or paid
upon any Junior Stock in any year.  "EBTA" means net income (excluding profit or
loss on disposal of a significant part of the  Corporation's  assets or separate
segment  thereof,  gains  on  restructuring  payables,  gains or  losses  on the
extinguishment of debt, expropriations of property, gains or losses that are the
direct result of a major casualty, or one-time losses resulting from prohibition
under a newly-enacted law or regulation)  before income taxes,  Dividends on the
shares of this Series and the  Corporation's  Series A Convertible  Shares,  and
amortization  of goodwill and  covenants  not to compete.  "CFO Costs" means the
costs, if such person is hired by the Corporation on or before January 31, 2000,
of (i) retaining an executive search firm to hire a chief financial  officer for
the Corporation and (ii)  relocating such person.  "Warburg  Warrants" means the
warrants to purchase 2,000,000 Common Shares issued to Warburg, Pincus Ventures,
L.P. ("Warburg") pursuant to that certain amended and restated warrant agreement
between the Corporation and Warburg dated as of the Initial Issuance Date.

     (ii) If EBTA per Fully Diluted  Common Share for the fiscal year ended July
31, 2000 is less than U.S. $0.20 (excluding CFO Costs),  then Dividends will not
be payable until such time as the Corporation meets the quarterly EBTA

                                      -2-
<PAGE>

targets set forth below for four (4) consecutive fiscal quarters. From and after
such time,  Dividends will be payable quarterly in cash in U.S. dollars,  before
any dividends  shall be set apart for or paid upon any Junior Stock in any year.
If the  Corporation  has not met the quarterly  EBTA targets set forth below for
four (4) consecutive  fiscal quarters by the fiscal quarter ended July 31, 2002,
then Dividends will not be payable on shares of this Series.


Period                                             Target EBTA per Fully Diluted
------                                             -----------------------------
                                                   Common Share
                                                   ------------

Fiscal quarter ending 10/31/99                     U.S.    $0.02

Fiscal quarter ending 1/31/00                               0.03

Fiscal quarter ending 4/30/00                               0.07

Fiscal quarter ending 7/31/00                               0.08

Fiscal quarter ending 10/31/00                              0.07

Fiscal quarter ending 1/31/01                               0.10

Fiscal quarter ending 4/30/01                               0.15

Fiscal quarter ending 7/31/01                               0.17

Fiscal quarter ending 10/31/01                              0.16

Fiscal quarter ending 1/31/02                               0.20

Fiscal quarter ending 4/30/02                               0.26

Fiscal quarter ending 7/31/02                               0.30



     "(c) To the extent  payable  pursuant to Section 2(b) hereof,  Dividends on
this Series shall accrue  quarterly on October 31, January 31, April 30 and July
31 of each year,  beginning  October 31, 1999, and shall be cumulative  from the
date of initial  issuance of the shares of this Series  (the  "Initial  Issuance
Date"),  whether or not earned or declared and whether or not in any fiscal year
there shall be assets,

                                      -3-
<PAGE>

net profits or surplus  legally  available for the payment of such  Dividends in
respect of such fiscal year,  so that if in any fiscal year or years,  Dividends
are not paid upon shares of this Series in the full amounts specified in Section
2(a) hereof,  unpaid Dividends which are payable under Section 2(b) hereof shall
accumulate  as against the holders of the Junior Stock and any sums in any later
years shall be paid to the holders of this Series with respect to any prior year
or years when Dividends were not paid.

     "(d) The record date for the determination of the holders of shares of this
Series who shall be entitled to receive  Dividends  (the "Record Date") shall be
thirty  (30) days prior to any payment  date,  and only the holders of shares of
this  Series of record on the Record  Date  shall be  entitled  to receive  such
Dividends.

     "(e) Dividends payable on shares of this Series for any period other than a
full dividend period shall be computed on the basis of a 360-day year consisting
of twelve  30-day  months.  Any  Dividend  payment made on shares of this Series
shall first be credited  against the earliest  accumulated but unpaid  Dividends
due with respect to the shares of this Series.

     "(f) No dividends shall be declared or paid or set aside for payment on any
share capital of the Corporation  ranking, as to dividends,  on a parity with or
subordinate to the shares of this Series for any period unless full  accumulated
Dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment  thereof set aside for such payment on the shares
of this Series for all Dividend  periods  terminating on or prior to the date of
payment of such dividends.  When Dividends are not paid in full on the shares of
this  Series and any other  preferred  shares of the  Corporation  ranking  with
respect to payment of dividends on a parity with the shares of this Series,  all
dividends  declared or paid upon shares of this Series and such other  preferred
shares  shall be  declared  and paid pro rata so that the  amount  of  dividends
declared and paid on the shares of this Series and such other  preferred  shares
shall in all cases bear to each other the same ratio that accumulated  dividends
per share (which in the case of noncumulative preferred shares shall not include
any accumulation in respect of unpaid  dividends for prior dividend  periods) on
shares of this Series and such other preferred shares bear to each other. Except
as provided in the preceding  sentence,  unless full accumulated

                                      -4-
<PAGE>

Dividends  have been  paid or  declared  and a sum  sufficient  for the  payment
thereof  set  aside  for  payment,   no  dividends   (other  than  dividends  or
distributions paid in Common Shares, or options, warrants or rights to subscribe
for or purchase  Common  Shares or, in each case,  any other series of shares of
the Corporation ranking subordinate to the shares of this Series as to dividends
and upon  liquidation)  shall be declared and paid or a sum  sufficient  for the
payment thereof set aside for payment or any other distribution declared or made
upon or in respect  of the Common  Shares,  Series A  Convertible  Shares or any
other class of shares of the Corporation  ranking  subordinate to or on a parity
with the shares of this Series as to  dividends or upon  liquidation.  No Common
Shares,  Series A  Convertible  Shares or shares of any other class of shares of
the  Corporation  ranking  subordinate to or on a parity with the shares of this
Series as to dividends or upon liquidation shall be redeemed, purchased, retired
or otherwise  acquired for any  consideration  (and no funds shall be paid to or
made  available for a sinking fund for the redemption of any such share capital)
by the  Corporation  (except by  conversion  into or exchange  for shares of the
Corporation ranking subordinate to the shares of this Series as to dividends and
upon  liquidation  or except with respect to Common Shares that the  Corporation
has  become  obligated  to redeem  prior to the  issuance  of any shares of this
Series upon the occurrence of specified circumstances) unless, in each case, the
full  accumulated  Dividends  in respect of this Series  shall have been paid or
declared  and a sum  sufficient  for the payment  thereof set aside for payment.
Holders of shares of this Series shall not be entitled to any dividend,  whether
payable in cash,  property  or stock,  in excess of the full  Dividends  on such
shares.

     "(g) Upon  conversion  of any shares of this  Series by any holder  thereof
pursuant to Section 7 hereof,  any Dividends  accrued and payable to such holder
shall be forfeited and the Corporation shall have no further  obligation to such
holder of shares of this Series for such accumulated Dividends.

     "3.  Liquidation  Rights.  (a) In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of the affairs of the Corporation, after
payment  or  provision  for  payment of the debts and other  liabilities  of the
Corporation and any  preferential  amounts payable with respect to securities of
the Corporation  ranking prior to the shares of this Series  ("Senior  Preferred
Shares"),  the

                                      -5-
<PAGE>

holders of each share of this  Series  shall be  entitled  to receive out of the
assets of the Corporation available for distribution to shareholders, before any
distribution  of  assets  is made to  holders  of Junior  Stock,  a  liquidating
distribution in an amount equal to the Conversion Rate multiplied by the greater
of (i) the Conversion Price per share of this Series plus an amount equal to any
accrued and unpaid  Dividends,  whether or not declared  (including  accumulated
Dividends),  to and  including  the date of  distribution  or (ii) the per share
amount  distributable to the holders of shares of this Series as if such holders
had converted their shares of this Series into Common Shares pursuant to Section
7 hereof immediately prior to such dissolution, liquidation or winding up of the
affairs  of  the  Corporation  (plus  accumulated  Dividends,   whether  or  not
declared).  Amounts payable  pursuant to clause (i) or (ii) of this Section 3(a)
shall be  distributed  ratably  among the  holders  of shares of this  Series in
proportion  to the number of shares of this Series  held.  After  payment to the
holders of shares of this  Series of the full  amount to which such  holders are
entitled as set forth above,  the holders of shares of this Series shall have no
right or claim to any of the remaining assets of the Corporation.

     "(b) If upon any such dissolution, liquidation or winding up of the affairs
of the  Corporation,  the  assets  of the  Corporation  distributable  among the
holders of shares of this Series and the holders of all other  classes or series
of shares of the Corporation  ranking on a parity with the shares of this Series
shall be  insufficient  to permit the  payment to them of the full  preferential
amounts to which they are entitled, then the entire assets of the Corporation so
to be distributed  shall be  distributed  ratably among the holders of shares of
this  Series and such other  classes or series of shares of the  Corporation  in
proportion  to  the  sum  of  the  accumulated  dividends  and  the  liquidation
preferences per share.

     "(c)  The  sale,   conveyance,   mortgage,   pledge  or  lease  of  all  or
substantially  all  the  assets  of the  Corporation  shall  be  deemed  to be a
liquidation,  dissolution or winding up of the  Corporation for purposes of this
Section 3.

     "4. Optional Redemption.  (a) The shares of this Series may not be redeemed
before the fifth  anniversary  of the Initial  Issuance Date.  Thereafter,  each
share of this Series shall be redeemable  (subject to subsection  4(d) below) at
the option of the  Corporation,  in whole or in

                                      -6-
<PAGE>

part, at the redemption price,  which shall be an amount equal to the Conversion
Rate  multiplied  by the greater of (i) the  Conversion  Price per share of this
Series  plus the amount of any accrued  and unpaid  Dividends  per share of this
Series (including accumulated Dividends,  whether or not declared),  or (ii) the
Fair Market  Value of a share of this Series (as defined  below).  For  purposes
hereof,  the Fair Market Value shall be  determined  by a nationally  recognized
independent  investment  banking firm mutually  agreed to by the Corporation and
the holder of a majority of the shares of this Series  then  outstanding,  whose
determination shall be conclusive.

     "(b)(i)  In case the  Corporation  shall  desire to  exercise  its right to
redeem any shares of this  Series,  it shall give notice of such  redemption  to
holders of the shares of this Series to be redeemed as  hereinafter  provided in
this Section 4(b).

          "(ii) Notice of redemption  shall be given to the holders of shares of
     this Series to be redeemed by mailing  such notice by  first-class  mail to
     their last  addresses as they shall appear upon the register for the shares
     of this Series not less than 120 calendar  days prior to the date fixed for
     redemption.

          "(iii) Each such notice of redemption (A) shall specify the date fixed
     for redemption and the redemption  price at which shares of this Series are
     to be redeemed,  (B) shall state that payment of the  redemption  price for
     the  shares of this  Series to be  redeemed  will be made at the  principal
     executive  offices of the Corporation,  upon  presentation and surrender of
     certificates  representing such shares of this Series, and (C) if less than
     all the shares of this Series are to be redeemed,  shall specify the number
     of shares of this Series held by each  holder to be  redeemed.  In case any
     certificate  representing  shares of this  Series is to be redeemed in part
     only,  the notice of  redemption  which relates to such  certificate  shall
     state the number of shares of this Series  represented by such  certificate
     to be redeemed and shall state that on and after the redemption  date, upon
     surrender of such  certificate,  a new certificate or certificates  for the
     number of shares of this Series  equal to the  unredeemed  portion  thereof
     will be issued.

                                      -7-
<PAGE>

          "(iv) If less than all the shares of this  Series are to be  redeemed,
     the  Corporation  shall effect such  redemption  pro rata among the holders
     thereof  (based on the number of shares of this  Series held on the date of
     notice of redemption).

     "(c) (i) If the giving of notice of redemption shall have been completed as
provided above,  the shares of this Series specified in such notice shall become
redeemable,  and shall be  redeemed by the  Corporation  upon  presentation  and
surrender of the certificate  representing  such shares,  on the date and at the
place stated in such notice at the redemption  price, and on and after such date
fixed for  redemption,  notwithstanding  that any certificate for shares of this
Series  so  called  for  redemption   shall  not  have  been   surrendered   for
cancellation,  unless  there  shall  have  been  a  default  in  payment  of the
redemption  price,  all shares of this  Series  called for  redemption  shall no
longer be deemed to be  outstanding,  and all rights with respect to such shares
of this Series shall forthwith cease and terminate  except only the right of the
holders thereof to receive from the Corporation  the redemption  price,  without
interest, of the shares to be redeemed,  and such shares shall not thereafter be
transferred on the books of the  Corporation or be deemed to be outstanding  for
any purpose whatsoever.

          "(ii) Upon presentation of any certificate representing shares of this
     Series only a portion of which are to be redeemed,  the  Corporation  shall
     immediately  issue,  at its  expense,  a new  certificate  or  certificates
     representing the shares of this Series not redeemed.

     "(d) Except as provided in paragraph (a) above, the Corporation  shall have
no right to redeem  the  shares of this  Series.  Any  shares of this  Series so
redeemed shall be permanently retired, shall no longer be deemed outstanding and
shall not under any circumstances be reissued, and the Corporation may from time
to time take such appropriate corporate action as may be necessary to reduce the
authorized  shares of this Series  accordingly.  Nothing herein  contained shall
prevent or restrict the purchase by the Corporation, from time to time either at
public or private sale, of the whole or any part of the shares of this Series at
such price or prices as the Corporation may determine, subject to the provisions
of applicable law.

                                      -8-
<PAGE>

     "5. No Mandatory Redemption. The shares of this Series shall not be subject
to mandatory redemption by the Corporation.

     "6. Voting  Rights.  (a) Each issued and  outstanding  share of this Series
shall be  entitled  to the  number  of votes  equal to the  Conversion  Rate (as
adjusted from time to time pursuant to Section 7(a) hereof),  at each meeting of
shareholders of the Corporation with respect to any and all matters presented to
the shareholders of the Corporation for their action or consideration. Except as
provided by law, by the  provisions of paragraph (b) below or by the  provisions
establishing the terms of any other class of preferred stock of the Corporation,
holders of the  shares of this  Series  and of any other  outstanding  preferred
stock,  including without limitation the Series A Convertible Shares, shall vote
together with the holders of Common Shares as a single class.

     (b) In addition to any other rights provided by law, the Corporation  shall
not amend,  alter or repeal the  preferences,  special rights or other powers of
the shares of this Series or any other provision of the Corporation's constating
documents that would adversely affect the rights of the holders of the shares of
this Series, including, without limitation, any increase in the number of shares
of this Series,  without the written consent or affirmative  vote of the holders
of at least 66-2/3% of the then  outstanding  aggregate number of such adversely
affected  shares  of this  Series,  given in  writing  or by vote at a  meeting,
consenting  or  voting  (as the case  may be)  separately  as a class.  For this
purpose,  the  authorization or issuance of any series of preferred stock of the
Corporation  with  preference  or priority  over,  or being on a parity with the
shares of this  Series as to the right to receive  either  dividends  or amounts
distributable  upon  liquidation,  dissolution or winding up of the  Corporation
shall be deemed to adversely affect the shares of this Series.

     "7.  Conversion.  (a) (i) Each share of this Series may be converted at any
time, at the option of the holder thereof,  in the manner hereinafter  provided,
into fully-paid and nonassessable Common Shares, provided,  however, that on any
redemption of any shares of this Series or any  liquidation of the  Corporation,
the right of  conversion  shall  terminate  at the close of business on the full
business  day next  preceding  the date  fixed  for such  redemption  or for the
payment of any amounts distributable

                                      -9-
<PAGE>

on liquidation to the holders of the shares of this Series. The number of Common
Shares of the  Corporation  into which each share of this Series is  convertible
(the  "Conversion  Rate") shall equal,  for each one share of this Series,  such
number of Common Shares equal to (I)(A) the sum of (1) U.S. $10,000,000 plus (2)
the sum of any  Adjustment  Amounts for any fiscal  periods  preceding  the last
completed fiscal period (the sum of the amounts in (A)(1) and (A)(2),  the "Base
Factor") plus (B) the Adjustment  Amount,  if any, for the last completed fiscal
period,  divided by (II) the  conversion  price for shares of this  Series  (the
"Conversion  Price"),  divided by (III) 2,500,000.  The initial  Conversion Rate
shall be one  Common  Share for each one share of this  Series  surrendered  for
conversion,  representing an initial  Conversion  Price (for purposes of Section
7(g)) of U.S. $4.00 per share of the Corporation's Common Shares. The applicable
Conversion Rate and Conversion  Price from time to time in effect are subject to
adjustment as hereinafter provided.

          (ii) For purposes hereof, the term "Adjustment  Amount" shall mean (a)
     $800,000 as of October 31, 2000,  (b) two percent (2.0%) of the Base Factor
     in effect at such time, for any adjustment  occurring from November 1, 2000
     through  October 31, 2004;  (c) three percent  (3.0%) of the Base Factor in
     effect at such time,  for any  adjustment  occurring  from November 1, 2004
     through October 31, 2005; (d) three and  three-quarters  percent (3.75%) of
     the Base Factor in effect at such time, for any  adjustment  occurring from
     November  1, 2005  through  October  31,  2006;  and (e) four and  one-half
     percent  (4.5%)  of the  Base  Factor  in  effect  at  such  time,  for any
     adjustment  occurring from and after November 1, 2006;  provided,  however,
     that in the event that EBTA per Fully  Diluted  Common Share for the fiscal
     year ended July 31, 2000 is greater than or equal to U.S. $0.20  (excluding
     CFO Costs),  then the Adjustment Amount for all purposes shall be zero; and
     provided,  further,  that in the event the EBTA per  Fully  Diluted  Common
     Share for the  fiscal  year  ended  July 31,  2000 is less than U.S.  $0.20
     (excluding CFO Costs) and the Corporation  meets the quarterly EBTA targets
     set forth below for four (4) consecutive  fiscal quarters  thereafter,  the
     Adjustment  Amount shall be zero in respect of any fiscal  quarter ended on
     or after  the last  day of such  fourth  consecutive  fiscal  quarter.  For
     purposes of paragraph (i) above and clauses (b)-(e) of this paragraph (ii),
     the Adjustment  Amount shall be determined and the Conversion Rate shall be
     adjusted as of the end of each

                                      -10-
<PAGE>

     fiscal  quarter.  Any  conversion of shares of this Series shall be made at
     the  Conversion  Rate in effect as of the end of the fiscal  quarter  ended
     immediately prior to the date of such conversion.

Period                                             Target EBTA per Fully Diluted
------                                             -----------------------------
                                                   Common Share
                                                   ------------

Fiscal quarter ending 10/31/99                     U.S.    $0.02

Fiscal quarter ending 1/31/00                               0.03

Fiscal quarter ending 4/30/00                               0.07

Fiscal quarter ending 7/31/00                               0.08

Fiscal quarter ending 10/31/00                              0.07

Fiscal quarter ending 1/31/01                               0.10

Fiscal quarter ending 4/30/01                               0.15

Fiscal quarter ending 7/31/01                               0.17

Fiscal quarter ending 10/31/01                              0.16

Fiscal quarter ending 1/31/02                               0.20

Fiscal quarter ending 4/30/02                               0.26

Fiscal quarter ending 7/31/02                               0.30



          (iii) As of October 31, 2000, the Conversion  Price will be reduced by
     the  Per  Share  Valuation   Adjustment,   if  any.  "Per  Share  Valuation
     Adjustment"  means the Valuation  Adjustment  divided by the sum of (i) the
     total number of issued and  outstanding  Common  Shares as of September 30,
     1999 plus (ii) the total number of Shares into which the outstanding Series
     A Convertible  Preferred Shares are convertible plus (iii) the total number
     of Shares into which the outstanding  convertible  notes of the Corporation
     are  convertible  as of  September  30, 1999 plus (iv) the total  number of
     Shares into which the outstanding  shares of this Series are convertible as
     of October 31, 2000.  "Valuation  Adjustment" means the Reserve  Deficiency
     multiplied by a

                                      -11-
<PAGE>

     factor of 7.  "Reserve  Deficiency"  means  the  amount,  if any,  by which
     $4,736,000  exceeds the amounts  collected by the  Corporation on or before
     July 31, 2000 for services  performed on or before July 31, 1999.  No later
     than October 31, 2000, the Chief Financial Officer of the Corporation shall
     certify as to the Reserve  Deficiency  to each  record  holder of shares of
     this  Series.  At the  request of any  record  holder of the shares of this
     Series,  the Corporation shall cause the Reserve  Deficiency to be verified
     by an audit performed by an  internationally-recognized  independent public
     accounting firm.

          "(b) Whenever the  Conversion  Price or the  Conversion  Rate shall be
     adjusted  as  provided  in  Section  7(a)(i) or Section  7(g)  hereof,  the
     Corporation  shall  forthwith  file  at  each  office  designated  for  the
     conversion of the shares of this Series, a statement,  signed by any of the
     Chairman of the Board,  the President,  any Vice President or the Treasurer
     of the Corporation,  showing in reasonable  detail the facts requiring such
     adjustment.  The  Corporation  shall also cause a notice  setting forth any
     such adjustments to be sent by mail, first class,  postage prepaid, to each
     record  holder of shares of this Series at his or its address  appearing on
     the stock register.  If such notice relates to an adjustment resulting from
     an event referred to in paragraph 7(g)(vii),  such notice shall be included
     as part of the  notice  required  to be  mailed  and  published  under  the
     provisions of paragraph 7(g)(vii) hereof.

          "(c) The right of  conversion  shall be exercised by the holder by the
     surrender  of the  certificates  representing  shares of this  Series to be
     converted to the  Corporation  at any time during normal  business hours at
     the office or agency then  maintained by it for the conversion of shares of
     this Series (the "Conversion Office"), accompanied by written notice to the
     Corporation of such holder's election to convert and, if so required by the
     Corporation or any conversion agent, by an instrument of transfer,  in form
     satisfactory to the Corporation and to any conversion  agent, duly executed
     by the registered holder or by such holder's duly authorized attorney,  and
     transfer  tax stamps or funds  therefor,  if  required  pursuant to Section
     7(k).

          "(d) As promptly as practicable  after the surrender for conversion of
     one or more  certificates  representing  any  shares of this  Series in the
     manner  provided  in  Section  7(c) and the  payment  in cash of any amount
     required by the provisions of Section 7(k), the Corporation will deliver or

                                      -12-
<PAGE>

     cause to be delivered at the Conversion Office to or upon the written order
     of the holder of such shares,  a certificate or  certificates  representing
     the number of full Common Shares issuable upon such  conversion,  issued in
     such name or names as such  holder may  direct,  subject to any  applicable
     contractual   restrictions  and  any  restrictions  imposed  by  applicable
     securities  laws.  Such  conversion  shall  be  deemed  to have  been  made
     immediately prior to the close of business on the date of such surrender of
     certificates  representing  shares  of this  Series  in  proper  order  for
     conversion, and all rights of the holder of such shares as a holder of such
     shares shall cease at such time, and the person or persons in whose name or
     names the  certificates  for such Common  Shares are to be issued  shall be
     treated  for all  purposes  as having  become the record  holder or holders
     thereof at such time;  provided,  however,  that any such  surrender on any
     date when the stock transfer books of the Corporation shall be closed shall
     constitute  the person or  persons in whose name or names the  certificates
     for such  Common  Shares are to be issued as the  record  holder or holders
     thereof for all purposes  immediately prior to the close of business on the
     next succeeding day on which such stock transfer books are opened.

          "(e) Upon  conversion in the manner provided in this Section 7 of only
     a  portion  of the  number  of  shares  of  this  Series  represented  by a
     certificate so surrendered for conversion,  the Corporation shall issue and
     deliver or cause to be  delivered at the  Conversion  Office to or upon the
     written  order  of  the  holder  of  the  certificate  so  surrendered  for
     conversion,  at  the  expense  of the  Corporation,  a new  certificate  or
     certificates  representing the number of shares of this Series representing
     the unconverted  portion of the certificate so surrendered,  issued in such
     name  or  names  as such  holder  may  direct,  subject  to any  applicable
     contractual   restrictions  and  any  restrictions  imposed  by  applicable
     securities laws.

          "(f) All shares of this Series which shall have been  surrendered  for
     conversion as herein  provided  shall no longer be deemed to be outstanding
     and all rights with respect to such shares,  including the rights,  if any,
     to receive notices and to vote,  shall forthwith cease and terminate except
     only the right of the holder  thereof to receive  Common Shares in exchange
     therefor.  Any shares of this  Series so  converted  shall be  retired  and
     canceled and shall not be reissued,  and the  Corporation  may from time to

                                      -13-
<PAGE>

     time  take  such  appropriate  action as may be  necessary  to  reduce  the
     authorized shares of this Series accordingly.

     "(g) Anti-Dilution Provisions.

     (i) In order to  prevent  dilution  of the  right  granted  hereunder,  the
Conversion  Price shall be subject to adjustment from time to time in accordance
with this paragraph  7(g)(i).  At any given time the  Conversion  Price shall be
that  dollar  (or  part of a  dollar)  amount  the  payment  of  which  shall be
sufficient at the given time to acquire one Common Share of the Corporation upon
conversion  of shares of this Series.  Upon each  adjustment  of the  Conversion
Price  pursuant to this Section 7(g),  the  registered  holder of shares of this
Series shall thereafter be entitled to acquire upon exercise,  at the Conversion
Price  resulting  from such  adjustment,  the  number  of  Common  Shares of the
Corporation obtainable by multiplying the Conversion Price in effect immediately
prior to such  adjustment  by the  number  of  shares  of  Common  Shares of the
Corporation  acquirable  immediately  prior to such  adjustment and dividing the
product thereof by the Conversion  Price  resulting from such a adjustment.  For
purposes  of this  Section  7(g),  the term  "Number  of  Common  Shares  Deemed
Outstanding" at any given time shall mean the sum of (x) the number of shares of
the  Corporation's  Common Shares  outstanding  at such time,  (y) the number of
Common Shares of the Corporation  issuable  assuming  conversion at such time of
all  outstanding  shares  of  the  Corporation's  other  series  of  convertible
preferred  stock, if any, and (z) the number of Common Shares of the Corporation
deemed to be  outstanding at such time under  subparagraphs  7(g)(ii)(1) to (8),
inclusive.  For all purposes  hereof,  the term "Market Price," as to the Common
Shares as of any specified date, shall mean: (i) if the Common Shares are listed
or  admitted  for  trading  on one or more  United  States  national  securities
exchanges,  the daily  closing  price  for the  Common  Shares on the  principal
exchange in the United States on which the Common Shares are listed; (ii) if the
Common  Shares  are not listed or  admitted  for  trading  on any United  States
national securities  exchange,  the daily closing price for the Common Shares on
the Nasdaq National or Nasdaq Small-Cap Market  ("Nasdaq");  (iii) if the Common
Shares are not  listed or  admitted  for  trading  on a United  States  national
securities  exchange or on Nasdaq,  the daily closing price of the Common Shares
on the principal  stock exchange in Canada on which the Common Shares are listed
(expressed in United States  dollars based upon the noon buying rate in New York
City for cable transfers in Canadian  dollars as certified for customs  purposes
by the  Federal  Reserve  Bank of New York);  (iv) if the Common  Shares are not
listed or admitted to trading on any United States national or Canadian

                                      -14-
<PAGE>

national  securities  exchange or on Nasdaq, the average of the reported bid and
asked  prices on the trading  day  preceding  such date in the  over-the-counter
market as furnished by the National Quotation Bureau,  Inc., or, if such firm is
not then engaged in the business of reporting  such prices,  as furnished by any
member of the National  Association of Securities Dealers,  Inc. selected by the
Corporation;  or (v) if the Common  Shares are not publicly  traded,  the Market
Price for such day shall be the fair market value thereof  determined jointly by
the  Corporation  and the holder of a majority of the shares of this Series then
outstanding;  provided,  however,  that if such  parties  are  unable  to  reach
agreement  within  a  reasonable  period  of time,  the  Market  Price  shall be
determined  in good faith by the  independent  investment  banking firm selected
jointly by the  Corporation  and the holder of a majority  of the shares of this
Series  then  outstanding  or,  if  that  selection  cannot  be made  within  an
additional 15 days, by an  independent  investment  banking firm selected by the
American Arbitration Association in accordance with its rules.

     (ii) Except as provided in paragraph  7(g)(iii) or 7(g)(vi)  below,  if and
whenever on or after the Initial  Issuance Date, the Corporation  shall issue or
sell, or shall in accordance with subparagraphs  7(g)(ii)(1) to (8),  inclusive,
be deemed to have  issued or sold  (such  issuance  or sale,  whether  actual or
deemed, the "Triggering  Transaction") any Common Shares for a consideration per
share less than,

          (I)  (if the  Common  Shares  are not  traded  on the New  York  Stock
     Exchange,  the American Stock Exchange or the Nasdaq  National  Market) the
     Conversion Price in effect  immediately  prior to the time of such issuance
     or sale,  then forthwith upon such  Triggering  Transaction  the Conversion
     Price shall,  subject to subparagraphs (1) to (8) of this Section 7(g)(ii),
     be reduced to the  Conversion  Price  (calculated to the nearest tenth of a
     cent)  determined  by  dividing:  (i) an amount equal to the sum of (x) the
     product   derived  by  multiplying  the  Number  of  Common  Shares  Deemed
     Outstanding  immediately  prior  to  such  Triggering  Transaction  by  the
     Conversion  Price  then in  effect,  plus  (y) the  consideration,  if any,
     received  by  the   Corporation   upon   consummation  of  such  Triggering
     Transaction,  by (H) an amount equal to the sum of (x) the Number of Common
     Shares Deemed Outstanding  immediately prior to such Triggering Transaction
     plus (y) the  number of Common  Shares  issued  (or  deemed to be issued in
     accordance  with  subparagraphs  7(g)(ii)(l) to (8)) in connection with the
     Triggering Transaction; or

                                      -15-
<PAGE>

          (II) (if the Common Shares are traded on the New York Stock  Exchange,
     the  American  Stock  Exchange or the Nasdaq  National  Market) the average
     Market Price for the ten trading days  immediately  preceding such issuance
     or sale,  then forthwith upon such Triggering  Transaction,  the Conversion
     Price shall,  subject to subparagraphs (1) to (8) of this Section 7(g)(ii),
     be reduced to the  Conversion  Price  (calculated to the nearest tenth of a
     cent) determined by multiplying the Conversion Price in effect  immediately
     prior  to the  time of  such  Triggering  Transaction  by a  fraction,  the
     numerator  of which  shall be the sum of (x) the  Number of  Common  Shares
     Deemed Outstanding immediately prior to such Triggering Transaction and (y)
     the number of Common Shares which the aggregate  consideration  received by
     the  Corporation  upon such  Triggering  Transaction  would purchase at the
     average  Market Price for the ten trading days  immediately  preceding such
     Triggering Transaction, and the denominator of which shall be the Number of
     Common  Shares  Deemed   Outstanding   immediately  after  such  Triggering
     Transaction.

          For purposes of determining the adjusted  Conversion  Price under this
paragraph 7(g)(ii),  the following  subsections (1) to (8), inclusive,  shall be
applicable:

               (1) In case the Corporation at any time shall in any manner grant
          (whether  directly or by assumption in an  amalgamation  or otherwise)
          any rights to  subscribe  for or to  purchase,  or any options for the
          purchase  of,  Common   Shares  or  any  stock  or  other   securities
          convertible  into or  exchangeable  for Common  Shares (such rights or
          options  being  herein  called   "Options"  and  such  convertible  or
          exchangeable  stock or  securities  being herein  called  "Convertible
          Securities"),  whether or not such  Options or the right to convert or
          exchange any such Convertible Securities are immediately  exercisable,
          and the price per share for which the Common  Shares are issuable upon
          exercise, conversion or exchange (determined by dividing (x) the total
          amount,   if  any,  received  or  receivable  by  the  Corporation  as
          consideration  for the granting of such  Options,  plus the  aggregate
          amount of additional consideration payable to the Corporation upon the
          exercise of all such Options,  plus, in the case of such Options which
          relate to Convertible  Securities,  the aggregate amount of additional
          consideration,  if  any,  payable  upon  the  issue  or  sale  of such
          Convertible Securities and upon the conversion or exchange thereof,

                                      -16-
<PAGE>

          by (y) the total  maximum  number of Common  Shares  issuable upon the
          exercise  of  such  Options  or the  conversion  or  exchange  of such
          Convertible Securities) shall be less than the average Market Price in
          effect for the ten trading days  immediately  prior to the time of the
          granting of such  Options (if the Common  Shares are traded on the New
          York  Stock  Exchange,  the  American  Stock  Exchange  or the  Nasdaq
          National Market) or the Conversion Price in effect  immediately  prior
          to the time of the granting of such Options (if the Common  Shares are
          not traded on the New York Stock Exchange, the American Stock Exchange
          or the  Nasdaq  National  Market),  then the total  maximum  number of
          Common  Shares  issuable  upon the exercise of such Options or, in the
          case of Options for  Convertible  Securities,  upon the  conversion or
          exchange  of such  Convertible  Securities,  shall  (as of the date of
          granting of such Options) be deemed to be outstanding and to have been
          issued  and sold by the  Corporation  for such  price  per  share.  No
          adjustment  of the  Conversion  Price  shall be made  upon the  actual
          issuance of such Common Shares or such Convertible Securities upon the
          exercise of such Options, except as otherwise provided in subparagraph
          (3) below.

               (2) In case the Corporation at any time shall in any manner issue
          (whether directly or by assumption in an amalgamation or otherwise) or
          sell any Convertible Securities, whether or not the rights to exchange
          or convert thereunder are immediately  exercisable,  and the price per
          share for which Common  Shares are issuable  upon such  conversion  or
          exchange  (determined  by dividing  (x) the total  amount  received or
          receivable by the Corporation as  consideration  for the issue or sale
          of  such  Convertible   Securities,   plus  the  aggregate  amount  of
          additional consideration,  if any, payable to the Corporation upon the
          conversion or exchange  thereof,  by (y) the total  maximum  number of
          Common  Shares  issuable  upon the  conversion or exchange of all such
          Convertible Securities) shall be less than the average Market Price in
          effect for the ten trading days immediately  prior to the time of such
          issue or sale (if the  Common  Shares are traded on the New York Stock

                                      -17-
<PAGE>

          Exchange,  the American Stock Exchange or the Nasdaq National  Market)
          or the  Conversion  Price in effect  immediately  prior to the time of
          such  issue or sale (if the  Common  Shares  are not traded on the New
          York  Stock  Exchange,  the  American  Stock  Exchange  or the  Nasdaq
          National  Market),  then the total  maximum  number  of Common  Shares
          issuable  upon   conversion  or  exchange  of  all  such   Convertible
          Securities  shall  (as of the  date  of the  issue  or  sale  of  such
          Convertible  Securities) be deemed to be outstanding  and to have been
          issued  and sold by the  Corporation  for such  price  per  share.  No
          adjustment  of the  Conversion  Price  shall be made  upon the  actual
          issuance of such Common Shares upon exercise of the rights to exchange
          or convert  under such  Convertible  Securities,  except as  otherwise
          provided in subparagraph (3) below.

               (3) If the purchase price provided for in any Options referred to
          in subparagraph  (1), the additional  consideration,  if any,  payable
          upon the conversion or exchange of any Convertible Securities referred
          to in  subparagraphs  (1) or (2), or the rate at which any Convertible
          Securities referred to in subparagraph (1) or (2) are convertible into
          or exchangeable for Common Shares shall change at any time (other than
          under or by reason of provisions  designed to protect against dilution
          of the type  set  forth  in  paragraphs  7(g)(ii)  or  7(g)(iv)),  the
          Conversion  Price in effect at the time of such change shall forthwith
          be readjusted to the Conversion  Price which would have been in effect
          at  such  time  had  such  Options  or  Convertible  Securities  still
          outstanding  provided  for such  changed  purchase  price,  additional
          consideration  or  rate,  as the case  may be,  at the time  initially
          granted,  issued or sold.  If the purchase  price  provided for in any
          Option   referred   to  in   subparagraph   (1)  or   the   additional
          consideration,  if any, payable upon the conversion or exchange of any
          Convertible Securities referred to in subparagraphs (1) or (2), or the
          rate at which any Convertible  Securities referred to in subparagraphs
          (1) or (2) are  convertible  into or  exchangeable  for Common Shares,
          shall be  reduced at any time  under or by reason of  provisions  with
          respect thereto designed to protect against dilution,  then in case of
          the delivery of Common  Shares upon the exercise of any such Option or
          upon  conversion  or exchange of any such  Convertible  Security,  the
          Conversion  Price then in effect hereunder shall forthwith be adjusted
          to such respective  amount as would have been obtained had such Option
          or Convertible Security never been issued as to such Common Shares and
          had  adjustments  been made upon the

                                      -18-
<PAGE>

          issuance of the Common Shares delivered as aforesaid, but only if as a
          result  of  such  adjustment  the  Conversion  Price  then  in  effect
          hereunder is hereby reduced.

               (4) On the  expiration  of any Option or the  termination  of any
          right  to  convert  or  exchange  any  Convertible   Securities,   the
          Conversion Price then in effect hereunder shall forthwith be increased
          to the Conversion Price which would have been in effect at the time of
          such   expiration  or  termination  had  such  Option  or  Convertible
          Securities,  to the  extent  outstanding  immediately  prior  to  such
          expiration or termination, never been issued.

               (5) In case any Options  shall be issued in  connection  with the
          issue  or  sale  of  other  securities  of the  Corporation,  together
          comprising one integral transaction in which no specific consideration
          is  allocated  to such  Options by the parties  thereto,  such Options
          shall be deemed to have been issued without consideration.

               (6) In case any Common Shares,  Options or Convertible Securities
          shall be issued  or sold or  deemed  to have  been  issued or sold for
          cash, the  consideration  received  therefor shall be deemed to be the
          amount  received by the  Corporation  therefor  (before  deduction for
          expenses or  underwriters'  discounts or  commissions  related to such
          issue or sale).  In case any Common  Shares,  Options  or  Convertible
          Securities  shall be issued  or sold for a  consideration  other  than
          cash, the amount of the consideration  other than cash received by the
          Corporation  shall  be  the  fair  value  of  such   consideration  as
          determined in good faith by the Board of Directors of the Corporation.

               (7) In case the Corporation  shall declare a dividend or make any
          other  distribution upon the share capital of the Corporation  payable
          in Common Shares,  Options,  or Convertible  Securities,  then in such
          case any Common Shares, Options or Convertible Securities, as the case
          may be, issuable in payment of such dividend or distribution  shall be
          deemed to have been issued or sold without consideration.

               (8)  For  purposes  of  this  paragraph  7(g)(ii),  in  case  the
          Corporation  shall take a record of the  holders

                                      -19-
<PAGE>

          of its Common Shares for the purpose of entitling  them (x) to receive
          a dividend or other distribution payable in Common Shares,  Options or
          in Convertible Securities,  or (y) to subscribe for or purchase Common
          Shares, Options or Convertible Securities, then such record date shall
          be  deemed to be the date of the  issue or sale of the  Common  Shares
          deemed  to have  been  issued  or sold  upon the  declaration  of such
          dividend or the making of such other  distribution  or the date of the
          granting of such right or  subscription  or purchase,  as the case may
          be.

          (iii) In the event the  Corporation  shall declare a dividend upon the
Common  Shares  (other  than a  dividend  payable  in Common  Shares  covered by
subparagraph  7(g)(ii)(7))  payable  otherwise  than out of  earnings  or earned
surplus,  determined  in  accordance  with U.S.  generally  accepted  accounting
principles,   including  the  making  of  appropriate  deductions  for  minority
interests,   if  any,  in  subsidiaries  (herein  referred  to  as  "Liquidating
Dividends"),  then,  as soon as possible  after the  conversion of any shares of
this Series, the Corporation shall, subject to applicable law, pay to the person
converting  such shares of this Series an amount equal to the aggregate value at
the  time of such  exercise  of all  Liquidating  Dividends  (including  but not
limited to the Common  Shares  which  would have been issued at the time of such
earlier  exercise  and all other  securities  which  would have been issued with
respect  to such  Common  Shares  by reason of stock  splits,  stock  dividends,
amalgamations or reorganizations,  or for any other reason). For the purposes of
this  paragraph  7(g)(iii),  a dividend  other than in cash shall be  considered
payable out of earnings or earned  surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such dividend
as determined in good faith by the Board.

          (iv) In case the Corporation  shall at any time subdivide  (other than
by  means  of  a  dividend   payable  in  Common  Shares  covered  by  paragraph
7(g)(ii)(7)) its outstanding  Common Shares into a greater number of shares, the
Conversion  Price  in  effect  immediately  prior to such  subdivision  shall be
proportionately reduced, and, conversely,  in case the outstanding Common Shares
of the  Corporation  shall be  combined  into a smaller  number of  shares,  the
Conversion  Price  in  effect  immediately  prior to such  combination  shall be
proportionately increased.

          (v) If any capital  reorganization  or  reclassification  of the share
capital of the  Corporation,  or amalgamation  of the  Corporation  with another
corporation,  or the sale of all or

                                      -20-
<PAGE>

substantially all of its assets to another corporation shall be effected in such
a way that  holders  of  Common  Shares  shall be  entitled  to  receive  stock,
securities,  cash or other  property  with  respect to or in exchange for Common
Shares,  then,  as  a  condition  of  such   reorganization,   reclassification,
amalgamation  or sale,  lawful and adequate  provision shall be made whereby the
holders of shares of this  Series  shall have the right to acquire  and  receive
upon conversion of the shares of this Series,  which right shall be prior to the
rights of the  holders of Junior  Stock (but after and  subject to the rights of
holders of Senior Preferred Shares,  if any), such shares of stock,  securities,
cash or other  property  issuable  or  payable  (as part of the  reorganization,
reclassification,  amalgamation or sale) with respect to or in exchange for such
number of  outstanding  Common  Shares  of the  Corporation  as would  have been
received upon  conversion of the shares of this Series at the  Conversion  Price
then in effect.  The Corporation will not effect any such  amalgamation or sale,
unless prior to the  consummation  thereof the  amalgamated  corporation  or the
corporation  purchasing such assets shall assume by written instrument mailed or
delivered  to the  holders of the shares of this  Series at the last  address of
each such holder  appearing on the books of the  Corporation,  the obligation to
deliver to each such holder such  shares of stock,  securities  or assets as, in
accordance  with the  foregoing  provisions,  such  holder  may be  entitled  to
receive. If a purchase,  tender or exchange offer is made to and accepted by the
holders of more than 50% of the  outstanding  Common Shares of the  Corporation,
the Corporation shall not effect any amalgamation or sale with the person having
made such offer or with any Affiliate (as defined below) of such person,  unless
prior to the consummation of such amalgamation or sale the holders of the shares
of this Series shall have been given a reasonable  opportunity  to then elect to
receive  upon the  conversion  of the  shares of this  Series  either the stock,
securities  or assets then  issuable  with  respect to the Common  Shares of the
Corporation or the stock,  securities or assets,  or the  equivalent,  issued to
previous  holders  of the  Common  Shares in  accordance  with such  offer.  For
purposes  hereof,  the term  "Affiliate"  with respect to any given person shall
mean any person  controlling,  controlled  by or under  common  control with the
given person.

          (vi) The provisions of this Section 7(g) shall not apply to any Common
Shares issued, issuable or deemed outstanding under subparagraphs 7(g)(ii)(1) to
(8) inclusive: (i) to any person pursuant to any stock option, stock purchase or
similar plan or arrangement  for the benefit of employees of the

                                      -21-
<PAGE>

Corporation  or its  subsidiaries  in effect  on the  Initial  Issuance  Date or
thereafter  adopted by the Board of Directors of the Corporation,  (ii) pursuant
to options,  warrants and conversion rights in existence on the Initial Issuance
Date,  (iii) upon exercise of the Warburg  Warrants or (iv) on conversion of the
shares of this Series or the sale of any additional shares of this Series.

          (vii) In the event that:

               (1) the  Corporation  shall  declare any cash  dividend  upon its
     Common Shares, or

               (2) the  Corporation  shall  declare any dividend upon its Common
     Shares payable in stock or make any special dividend or other  distribution
     to the holders of its Common Shares, or

               (3) the Corporation  shall offer for subscription pro rata to the
     holders of its Common Shares any additional shares of stock of any class or
     other rights, or

               (4) there shall be any capital reorganization or reclassification
     of the share  capital of the  Corporation,  including  any  subdivision  or
     combination  of its  outstanding  Common  Shares,  or  amalgamation  of the
     Corporation  with,  or sale of all or  substantially  all of its assets to,
     another corporation, or

               (5)  there  shall  be a  voluntary  or  involuntary  dissolution,
     liquidation or winding up of the Corporation;

then, in connection with such event,  the Corporation  shall give to the holders
of the shares of this Series:

               (A)  at least twenty (20) days' prior written  notice of the date
                    on which  the  books  of the  Corporation  shall  close or a
                    record  shall be taken for such  dividend,  distribution  or
                    subscription  rights  or for  determining  rights to vote in
                    respect  of  any  such   reorganization,   reclassification,
                    amalgamation, sale, dissolution,  liquidation or winding up;
                    and

               (B)  in the  case of any such  reorganization,  reclassification,
                    amalgamation, sale, dissolution,  liquidation or winding up,
                    at least twenty (20)

                                      -22-
<PAGE>

                    days' prior  written  notice of the date when the same shall
                    take place.

Such notice in accordance with the foregoing  clause (A) shall also specify,  in
the case of any such dividend,  distribution or subscription rights, the date on
which the holders of Common Shares shall be entitled thereto, and such notice in
accordance  with the  foregoing  clause (B) shall also specify the date on which
the holders of Common  Shares shall be entitled to exchange  their Common Shares
for  securities  or  other  property   deliverable  upon  such   reorganization,
reclassification, amalgamation, sale, dissolution, liquidation or winding up, as
the case may be. Each such  written  notice  shall be given by first class mail,
postage  prepaid,  addressed  to the holders of the shares of this Series at the
last address of each such holder appearing on the books of the Corporation.

                  (viii)  If at any time or from  time to time on or  after  the
Initial Issuance Date, the Corporation  shall grant,  issue or sell any Options,
Convertible  Securities or rights to purchase  property (the "Purchase  Rights")
pro rata to the record holders of the Common Shares of the  Corporation and such
grants,  issuances  or sales do not result in an  adjustment  of the  Conversion
Price under paragraph 7(g)(ii) hereof, then each holder of shares of this Series
shall be entitled to acquire  (within  thirty (30) days after the later to occur
of the initial  exercise date of such Purchase  Rights or receipt by such holder
of the notice concerning  Purchase Rights to which such holder shall be entitled
under paragraph 7(g)(vii)) and upon the terms applicable to such Purchase Rights
either:

                    (A) the  aggregate  Purchase  Rights which such holder could
                    have  acquired  if it had held the  number of Common  Shares
                    acquirable   upon   conversion  of  shares  of  this  Series
                    immediately  before  the  grant,  issuance  or  sale of such
                    Purchase  Rights;  provided that if any Purchase Rights were
                    distributed  to holders of Common Shares without the payment
                    of additional  consideration by such holders,  corresponding
                    Purchase  Rights  shall  be  distributed  to the  exercising
                    holders  of the  shares of this  Series as soon as  possible
                    after such  exercise and it shall not be  necessary  for the
                    exercising holder of the shares of this Series  specifically
                    to request delivery of such rights; or

                                      -23-
<PAGE>

                    (B) in the event that any such  Purchase  Rights  shall have
                    expired or shall expire prior to the end of said thirty (30)
                    day  period,  the  number of Common  Shares or the amount of
                    property  which such holder  could have  acquired  upon such
                    exercise  at the  time or times  at  which  the  Corporation
                    granted, issued or sold such expired Purchase Rights.

                    (ix) If any event occurs as to which,  in the opinion of the
Board,  the  provisions  of this Section 7(g) are not strictly  applicable or if
strictly  applicable  would not fairly  protect the rights of the holders of the
shares of this Series in accordance with the essential  intent and principles of
such  provisions,  then the Board shall make an adjustment in the application of
such provisions,  in accordance with such essential intent and principles, so as
to protect such rights as aforesaid,  but in no event shall any adjustment  have
the effect of increasing the Conversion Price as otherwise  determined  pursuant
to  any of the  provisions  of  this  Section  7(g)  except  in  the  case  of a
combination of shares of a type  contemplated in paragraph  7(g)(iv) and then in
no event to an amount larger than the Conversion  Price as adjusted  pursuant to
paragraph 7(g)(iv).

                    "(h) No  fractional  Common  Shares shall be issued upon the
               conversion  of  any  share  or  shares  of  this  Series.  If any
               fractional  interest  in a Common  Share  would,  except  for the
               provisions  of  this  Section  7(h),  be  deliverable   upon  the
               conversion of any share or shares of this Series, the Corporation
               shall in lieu of delivering the fractional  Common Share therefor
               satisfy such fractional interest by payment to the holder of such
               surrendered  share or shares of this  Series of an amount in cash
               equal  (computed to the nearest cent) to the current market value
               of such fractional interest,  computed on the basis of the Market
               Price  of the  Common  Shares  on the  date of  such  conversion,
               provided,   however,   that  no  amount  shall  be  paid  by  the
               Corporation to such holder of less than U.S. $5.00.

                    "(i)  The  Corporation  shall  be  entitled  to  effect  the
               mandatory conversion,  in whole or in part, of the shares of this
               Series in accordance  with this Section 7 if all of the following
               conditions   ("Mandatory   Conversion   Conditions")   have  been
               satisfied as of the date of the notice described below:

                    (a) the  Common  Shares  are  traded  on the New York  Stock
               Exchange,  the  American  Stock  Exchange or the Nasdaq  National
               Market at a Market Price greater than U.S. $8.00 per Common

                                      -24-
<PAGE>

               Share on each of the 10  consecutive  trading days preceding such
               date; and (b) the  Corporation's  EBTA for the three  consecutive
               fiscal  quarters  preceding  such date, as reported in or derived
               from the Corporation's quarterly or annual reports filed with the
               Securities and Exchange Commission,  shall have averaged at least
               U.S. $0.35 per Fully Diluted Common Share per fiscal quarter. All
               references  to per share  amounts or prices  with  respect to the
               above  conditions   shall  be  appropriately   adjusted  for  any
               subdivision,  consolidation,  or  reclassification  of the Common
               Shares.

                    Upon such  mandatory  conversion,  each share of this Series
               subject to such conversion  shall be converted into Common Shares
               at the then effective  Conversion Price for such shares.  In case
               the Corporation shall desire to exercise the right to convert all
               or, as the case may be, any shares of this  Series in  accordance
               with the right to do so, it shall  provide  notice to the holders
               of the  shares of this  Series  to be  converted  as  hereinafter
               provided in this Section 7(i)."

                         "(i) A  notice  of  conversion  shall  be  given to the
               holders of shares of this  Series to be  converted  by mailing by
               first-class  mail to their last  addresses  as they shall  appear
               upon the  register  for  shares of this  Series not less than 120
               calendar days prior to the date fixed for conversion.

                         "(ii) Each such notice of conversion  (A) shall specify
               the date fixed for  conversion  and the  number of Common  Shares
               issuable  to the  holder  of a share  of this  Series  upon  such
               conversion,  (B)  shall  state  the  offices  or  agencies  to be
               maintained by the Corporation for the purpose of such conversion,
               upon presentation and surrender of such shares of this Series and
               (C) if  less  than  all  the  shares  of  this  Series  are to be
               converted, shall specify the number of shares of this Series held
               by  each  holder,  and the  serial  numbers  of the  certificates
               thereof,  to be converted.  In case any certificate  representing
               shares of this Series is to be converted in part only, the notice
               of conversion which relates to such  certificate  shall state the
               number of shares of this Series  represented by such  certificate
               to be converted and shall state that on and after the  conversion
               date,  upon surrender of such  certificate,  a new certificate or
               certificates  for a number of shares of this Series  equal to the
               unconverted portion thereof will be issued.

                                      -25-
<PAGE>

                    "(j) The  Corporation  will at all  times  reserve  and keep
               available,  solely for the  purposes  of the  issuance  of Common
               Shares upon  conversion  of the shares of this  Series,  the full
               number of Common Shares as shall be issuable upon the  conversion
               of all such outstanding shares of this Series.

                    The Corporation  will endeavor to comply with all securities
               laws  regulating  the offer and  delivery  of Common  Shares upon
               conversion  of the shares of this Series and,  that if any Common
               Shares  required to be reserved for purposes of conversion of the
               shares  hereunder  require  registration  with or approval of any
               governmental  authority  under  any U.S.  (federal  or  state) or
               Canadian  law or the laws of any  province or territory of Canada
               before such Common Shares may be validly issued or delivered upon
               conversion,   the   Corporation   will,  in  good  faith  and  as
               expeditiously as possible,  endeavor to secure such  registration
               or approval, as the case may be.

                    "All Common Shares which shall be issued upon  conversion of
               the shares of this  Series  will upon  issuance be fully paid and
               nonassessable and not subject to preemptive rights.

                    "(k) The  issuance of  certificates  for Common  Shares upon
               conversion of shares of this Series shall be made without  charge
               for any stamp or other  similar tax in respect of such  issuance.
               However,  if any such certificate is to be issued in a name other
               than that of the  holder of record of the share or shares of this
               Series  so  converted,  the  holder  thereof  shall  pay  to  the
               Corporation the amount of any tax which may be payable in respect
               of any transfer  involved in such issuance or shall  establish to
               the  satisfaction of the Corporation  that such tax has been paid
               or is not payable.

                    "(l) In case (A) the Corporation shall take any action which
               would  require  an  adjustment  in the  number of  Common  Shares
               issuable  to holders  of shares of this  Series  upon  conversion
               thereof  pursuant to Section 7(g) above;  or (B) there shall be a
               voluntary or involuntary  dissolution,  liquidation or winding up
               of the affairs of the  Corporation;  then the  Corporation  shall
               cause to be given to the  holders of the shares of this Series at
               least ten days prior to the  applicable  record date  hereinafter
               specified,  a notice  of (X) the date on which a record  is to be
               taken for the purpose of any dividend,  distribution  or grant to
               holders of Common Shares which would require such an  adjustment,
               or,  if a record  is not to be  taken,  the date as of which  the

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<PAGE>

               holders  of  Common  Shares  of  record  to be  entitled  to such
               dividend,  distribution, or grant are to be determined or (Y) the
               date   on   which    such    reorganization,    reclassification,
               amalgamation, sale, transfer, dissolution, liquidation or winding
               up is expected to become  effective,  and the date as of which it
               is  expected  that  holders of Common  Shares of record  shall be
               entitled to exchange  their Common Shares for securities or other
               property or other assets  deliverable  upon such  reorganization,
               reclassification,   amalgamation,  sale,  transfer,  dissolution,
               liquidation,  or winding  up.  Failure to give such notice or any
               defect  therein  shall not affect the legality or validity of any
               proceedings described in subparagraphs (A) or (B) of this Section
               7(l).

                    "8. Miscellaneous.

                    "(a) For the purposes hereof:

                         "(i) the term "outstanding",  when used in reference to
                    shares of this  Series,  shall  mean  issued  shares of this
                    Series,   excluding   shares  of  this  Series   called  for
                    redemption; and

                         "(ii) any  shares of a series or class of shares of the
                    Corporation shall be deemed to rank:

                              "(A)  prior to shares of this  Series,  whether or
                         not the  dividend  rates,  dividend  payment  dates  or
                         redemption or  liquidation  prices per share thereof be
                         different  from those of shares of this Series,  if the
                         holders  of such  shares of a series or class of shares
                         shall be entitled to receipt  from the  Corporation  of
                         dividends or of amounts distributable upon liquidation,
                         dissolution or winding up, in preference or priority to
                         the holders of shares of this  Series,  as the case may
                         be;

                              "(B) on a parity  with or equal to  shares of this
                         Series,  whether or not the  dividend  rates,  dividend
                         payment dates or redemption or  liquidation  prices per
                         share thereof be different from those of shares of this
                         Series,  if the  holders of such  shares of a series or
                         class of shares  shall be entitled to the receipt  from
                         the    Corporation   of   dividends   or   of   amounts
                         distributable  upon  liquidation  to  their  respective
                         dividend   rates   or   liquidation   prices,   without

                                      -27-
<PAGE>

                         preference  or  priority  one over the other as between
                         the  holders  of such  shares  of a series  or class of
                         shares and the holders of shares of this Series; and

                              "(C) subordinate to shares of this Series, whether
                         or not the dividend  rates,  dividend  payment dates or
                         redemption or  liquidation  prices per share thereof be
                         different  from those of shares of this Series,  if the
                         rights  of the  holders  of such  shares of a series or
                         class of shares shall be  subordinate  to the rights of
                         the  holders of shares of this Series in respect of the
                         receipt  from  the  Corporation  of  dividends  and  of
                         amounts distributable upon liquidation,  dissolution or
                         winding up, including,  without limitation,  the Common
                         Shares of the Corporation.

                    "(b) So long as any shares of this  Series are  outstanding,
               in the event of any conflict  between the  provisions  hereof and
               any  corporate  document of the  Corporation  (both as  presently
               existing or hereafter  amended and  supplemented)  the provisions
               hereof, as the same may be amended or supplemented,  shall be and
               remain controlling.

                    "(c) The holders of the shares of this Series  shall have no
               preemptive rights.

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